Court No. - 7
Case :- WRIT - C No. - 26412 of 2018 Petitioner :- Smt. Deepti Upadhyay Respondent :- Birla Sun Life Insurance Company Ltd. And 2 Others Counsel for Petitioner :- Shiv Bahadur Singh,Akhil Sharma Counsel for Respondent :- Rahul Sahai
Hon'ble Saumitra Dayal Singh,J.
1. Heard Sri Akhil Sharma, learned counsel for the petitioner and Sri Rahul Sahai, learned counsel for the respondent.
2. The present writ petition is filed by the claimant against the award of the Permanent Lok Adalat, Aligarh (hereinafter referred to as the PLA) dated 1.6.2018 passed in PLA Case No. 40 of 2016. By that award, the PLA has proceeded to direct for payment/refund of premium amounts collected from the deceased together with the interest @ 9% per annum. However, it has rejected the claim of the death benefits of Rs. 54,15,400/- under the life insurance policy of the deceased, claimed by the claimant.
3. Admittedly, the deceased Avinash Kumar Upadhyay (hereinafter referred to as the insured) was the employee of the respondent insurance company. He had purchased an insurance policy from the respondent insurer on 14.5.2013 carrying a risk cover of Rs. 54,15,400/- at a monthly premium of Rs. 1,250/- only (hereinafter referred to as the policy). The policy remained in currency from 14.5.2013 to 14.7.2013. For reasons not required to be examined, it lapsed on 14.7.2013 and undisputedly, it was not revived till 09.1.2014. The dispute begins thereafter.
4. While the policy remained lapsed, again, admittedly, the insured was diagnosed with the disease Cancer of the mouth. Admittedly, he received some treatment including a surgical procedure performed on him where after it is claimed that a certificate of fitness was issued to him and he rejoined his services on 5.1.2014. He also claimed reimbursement of medical expenses.
5. Thereafter, again, undisputedly, on 10.1.2014, a letter was issued by the respondent insurer giving the insured an option to revive his lapsed insurance policy on certain terms. For ready reference, the contents of the letter dated 10.1.2014 are quoted below:
“January 10, 2014 Dear Mr. Avinash Kumar Upadhyay
Ref:- Your Policy No. 006045395 – Reinstatement Quotation
We are concerned that your policy is not in force, however you have an opportunity to reinstate your policy now by fulfilling the following requirements:-
Reinstatement Quotation Policy No. 006045395 Policy Owner Mr. Avinash Kumar Upadhyay Life Insured Mr. Avinash Kumar Upadhyay Modal Premium Rs.1,112.51 Frequency Monthly Lapse Date 14/07/2013 Amount due to revive the policy Rs.7,787.57 Interest @ 12% p.a. on unpaid Premium Rs.281.59 Service Tax Rs.934.51 Education Cess Rs.28.04 Amount received post lapsation Rs.0.00 Net amount due required to revive the policy Rs.9,031.70 Quotation valid up to (only for amount) 09/02/2014 Termination Date 14/07/2015
a) We would like to inform you that for reinstatement within 180 days of lapse date, only the Net Amount (displayed above) is required. However after 180 days of lapse date, you are required to pay the Net Amount and also fulfill other additional requirements like Certificate of Insurability and medicals (if any). In case there are any further requirements, we shall intimate you of the same.
b) Policy will get Terminated post completion of 2 years of lapsation period and hence cannot be Revived thereafter. The requirements to reinstate your policy are stated below:
Certificate of Insurability (COI) is required if you wish to reinstate your policy between January 11, 2014 and February 09, 2014.
1. Certificate of Insurability (enclosed) – for Insured In case you require any information or assistance our customer service executives would be glad to help you. Please feel free to get in touch with us at your convenience on any of the touch points mentioned below.
Call us on toll free number:- 1-800-270-7000 between 9 AM to 9 PM(IST) Monday to Saturday Email us : customerservice@birlasunlife.com In any of our branches: To locate the branch nearest to you, kindly log on to www.birlasunlife.com
Log onto www.birlasunlife.com for further information.
We take this opportunity to assure you of our best services at all times. Yours Sincerely, Customer Service”
6. It is further admitted, the insured paid the amount of premium vide cash deposited on 10.1.2014 itself. Though, the deposit of that amount is not disputed by the respondent insurer, it has been the case of the latter that the policy was revived with effect from 18.1.2014.
7. It is further not in dispute that from the time of the revival of the policy, the insured did not commit any default in payment of premium. However, on 4.9.2014, the insured succumbed to the illness Cancer. Arising from his death, the claim was made by the petitioner which was repudiated by the insurer on the ground, according to the medical report submitted by the claimant and the findings of the investigation made by the insurer, it was established that the insured was diagnosed with the disease Cancer - Buccal Mucosa and had undergone treatment for the same prior to his reinstatement/revival of the policy upon Certificate-of-Insurability submitted by the insured. Therefore, the Certificate-of-Insurability was declared to be false. Consequently, the claim was repudiated.
8. In this regard, it may be further noted, learned counsel for the petitioner has asserted that the insured being an employee of the respondent insurer, it was always aware of the medical condition of the insured and that express information as to the medical condition of the insured had been disclosed while applying for the medical leave and also for reimbursement of medical expenses, incurred by him.
9. It is therefore seen, according to the insurer, the Certificate- of-Insurability as claimed to have been issued by the insured while seeking the reinstatement or revival of the policy on January, 2014 became the foundation of the reason for repudiation of the contract of the insurance.
10. It was in such circumstances that the claim petition came to be filed before the PLA wherein according to the claimant, under the terms of the letter dated 10.1.2014, the insured was never required to submit a Certificate-of-Insurability as a condition to revive the policy. In this regard, it has been further submitted, the original terms of the insurance described as "Premium Discontinuance" stood novated by the terms of the letter dated 10.1.2014 whereby subject to payment of revival premium by 10.1.2014, the policy would stand revived without any further requirement to be met by the insured.
11. Alternatively, it has been submitted that the insured did not issue the Certificate-of-Insurability relied upon by the insurer in the proceedings before the PLA. Thus, it has also been suggested that the true and correct medical condition of the insured had been disclosed by him on 10.1.2014 itself.
12. The insurance company, filed a Certificate-of-Insurability (purportedly issued by the insured) and took the plea that the contents of the same were false and that the insured has practiced deliberate suppression of material fact while seeking revival of the insurance policy. Relying on the principle that the contract of insurance was a contract of utmost good faith, it was submitted that the same stood repudiated upon establishment of the fact that the insured had deliberately suppressed the material fact as to his ill health. Cancer being a life threatening disease, the insurer could not be fastened with the liability, if it had not been made aware of the insured having contracted that disease before seeking reinstatement or revival of the insurance policy.
13. The PLA took note of these submissions advanced by learned counsel for the parties. However, after taking note of the objection raised by the claimant that the Certificate-of-Insurability relied upon by the insurer was a forged document, it did not return any finding there on. Instead, the PLA proceeded to reject the claim petition on the ground and reasoning that the contract of insurance being one of utmost good faith and it being undisputed that the insured did not disclose the factum of disease Cancer suffered by him, the contract of insurance stood repudiated upon such concealment practised by the insured.
14. Learned counsel for the petitioner has vehemently urged that in the first place, the insured being an employee of the respondent insurer and it being undisputed that he had gone on a medical leave to receive treatment for the disease Cancer where after he returned and filed medical claim for the treatment he received, there was no question of concealment of that illness suffered by the insured. Factually, there is no question of concealment. Second, it has been submitted that the original contract terms stood novated by the issuance of the letter dated 10.1.2014 by the respondent insurer to which the insured had agreed and signified his acceptance by depositing the revival premium on the date 10.1.2014. Therefore, it has been submitted, a novated contract came into existence between the parties where under the insured was not obliged to submit a Certificate-of-Insurability. Third, it has been submitted that no finding having been returned on the issue of genuineness or otherwise of the Certificate-of- Insurability, relied by the insurer, the claim could not have been rejected on a presumption that the insured had concealed the correct fact pertaining to his medical condition.
15. Learned counsel for the respondent insurer, on the other hand, submits that besides the original clause in the agreement of premium discontinuance, there also exists a clause of validity and non- disclosure, where under it was made clear that the policy was to be issued in utmost good faith based on the statement made by the insured and that failure to disclose or misrepresentation of material fact would lead to the termination of the contract ab initio or denial of the claim subject to the provisions of the Section 45 of the Insurance Act, 1938 (hereinafter referred to as 'the Act'). As to the contract clauses referred to by learned counsel for the insurer, it is useful to extract the same as below:
“Premium Discontinuance If you are unable to pay the installment premium by the due date, you will be given a grace period of 30 days during which time all benefits under the policy will continue.
If we do not receive the entire installment premium by the end of the grace period, this policy will be deemed lapsed and all benefits will cease immediately. The lapse date is the date the unpaid premium was due. You will be given two years from the lapse date to reinstate your policy.
To reinstate the policy, you must pay all unpaid installment premiums due till date plus interest thereon. The interest we will charge is at a rate declared by us from time to time at our sole discretion. In addition, you must provide us with evidence of insurability satisfactory to us with respect to the life insured. The effective date of reinstatement is when these requirements are met and approved by us, at our sole discretion.
Validity and Non-Disclosure This policy is issued in utmost good faith based on the declarations and statements made by you and we cannot be held responsible in any manner for any action taken by us based on these declarations and statements. You and the life insured under this policy have an obligation to disclose every fact material to our assessment of the risk of issuing this policy. Failure to disclose or misrepresentation of a material fact will allow us to terminate the contract ab initio or deny the claim, subject to the provisions of Section 45 of the Insurance Act, 1938.”
16. Then, referring to Section 45 of the Act, it has been further submitted, non-disclosure of fact pertaining to life threatening disease suffered by the insured itself amounted to suppression of material fact and, therefore, the contract of insurance had been rightly repudiated as void. In this regard, reliance has been placed on the decision of the Supreme Court in Satwant Kaur Sandhu Vs. New India Assurance Company Ltd., 2009 (76) ALR 645.
17. Reference has also been made to the document being letter submitted by the claimant dated 30.11.2014 before the Claim Redressal Machinery of the respondent insurer wherein reference was made to the Certificate-of-Insurability submitted by the insured along with the payment of premium on 10.1.2014. It has thus been submitted that the Certificate-of-Insurability referred to in the claim repudiation made by the respondent insurance company and by the PLA is wholly based on the conduct of the insured himself and the claimant cannot now turn around to deny the submission of that Certificate-of- Insurability.
18. As to the submissions advanced by the learned counsel for the petitioner as to due disclosure made by the insured while seeking leave and while submitting medical papers, it has been submitted, the contract of service was independent and distinct from the contract of insurance. Disclosure of a fact under the service contract had no bearing or connection with the contract of insurance entered into between the same parties. While the respondent may have executed both contracts, however, the two contracts were executed in two different capacities for two different purpose. The facts and conduct of the parties with reference to the contract for service cannot be transposed or read in the other.
19. Having heard learned counsel for the parties, in the first place, as to fact it cannot be denied that a Certificate-of-Insurability had been issued by the insured. However, its contents are disputed. Thus, the Certificate-of-Insurability relied upon by the insurer is disputed to the petitioner/claimant. The PLA noted the objection raised by the petitioner to the document produced by the insurer but has chosen not to record any finding as to that. In that view of the matter, this issue cannot be seen any further by this Court in judicial review proceedings.
20. Also, the fact that the insured may have disclosed the factum of life threatening illness suffered (and treatment received by him), in his capacity as an employee of the respondent did not and cannot be accepted to be a fair and true disclosure of the medical condition suffered by him with reference to the contract of life insurance. That contract having been entered into between the parties, independent of the pre-existing contract of service, and there being no evidence of that disclosure (made by the insured), being with reference to the contract of insurance, it has to be stated to be accepted - for the purpose of the contract of insurance, the rights of the parties would continue to be governed by that law alone, to the exclusion of the rights and obligations under the contract of service existing between the parties, as affected by the said disclosure. Disclosure of the medical condition to the employer under that contract would have no bearing of the contract of insurance entered into between the parties.
21. However, the above extracted two clauses of the contract of insurance, read with Section 45 of the Act and the terms and conditions offered by the letter dated 10.1.2014 (extracted above), do call for an examination both as to facts and as to law. However, before that exercise be fruitfully engaged in, it would be necessary to also ascertain whether the Cerificate-of-Insurability relied upon by the insurer was a genuine document. Insofar as the PLA has not recorded any finding as to the genuineness or otherwise of the documents of the insured produced by the insurer, the matter has to be remitted to the PLA to pass a fresh order to record specific finding as to the genuineness or otherwise of that document.
22. The PLA has also not recorded any finding on the plea of novation of contract that has been raised specifically (during hearing of this petition). Though that plea may not have been specifically raised before the PLA however, since that plea is vital to be decided in as much as the insurer does not dispute issuance of the letter dated 10.01.2014 but relies on pre-existing contract clauses to deny novation, that issue being dependant on facts, it also appears to call for a specific and fresh finding by the PLA. It would not be proper for this court to examine that issue of fact and law, in the existing findings of the PLA.
23. Once and if a Cerificate-of-Insurability is proved before the PLA, its impact on the contract would also be required to be examined in light of the clause of the agreement read with Section 45 of the Act and the letter dated 10.1.2014 admitted between the parties.
24. Whether a novated contract came into existence and even if such contract came into existence, whether it was open to the insurer to question the same as void in view of the Section 45 of the Act and the clause of validity and non-disclosure contained in the original earlier document would remain matters to be considered by the PLA. No observation is being made on that and other issues at this stage, though extensive arguments have been advanced by the learned counsel for the parties, since it is considered appropriate that the PLA may first return its own findings as to the issues noted above.
25. The impugned award of the PLA dated 1.6.2018 is set aside and the matter is remitted to pass a de-novo award. The proceedings thus remanded, being both pertaining to facts and as also the law, it is expected that the PLA may afford a short/limited, but reasonable opportunity to either party to lead fresh evidence. Also, the proceedings being old, it is further expected that the PLA may conclude the proceedings, as expeditiously as possible, preferably within a period of six months from the date of production of certified copy of this order by either party.
26. With the aforesaid observations, the present petition is disposed of.
Order Date :- 22.1.2019 Prakhar