Anitha Kumari Pillai v Bajaj Allianz Life Insurance Co. Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE S.SIRI JAGAN** ## **TUESDAY, THE 31ST DAY OF JULY 2012/9TH SRAVANA 1934** ## **WP(C).No. 22954 of 2008 (G)** **-----------------------------------------** **PETITIONER(S):** **-----------------------** **ANITHA KUMARI PILLAI, ANU BHAVAN, NADUVILAKKARA ALUMMOODU P.O., MUKHATHALA, THRIKKOVILVATTOM VILLAGE, KOLLAM TALUK, KOLLAM DISTRICT.** ## **BY ADV. SRI.BECHU KURIAN THOMAS** ## **RESPONDENT(S):** **-------------------------** **1. BAJAJ ALLIANZ LIFE INSURANCE CO.LTD. REGISTERED OFFICE , 4TH & 5TH FLOOR, ASHOKA PLAZA CORPORATE SOFTWARE PARK, S. NO. 32/3, NAGAR ROAD VINAN NAGAR, PUNE - 411014.** **2. THE BRANCH MANAGER, OPERATION DEPARTMENT, M/S BAJAJ ALLIANZ LIFE INSURANCE CO.LTD., PATTOM JUNCTION THIRUVANANTHAPURAM.** ## **BY ADV. SRI.JESWIN P.VARGHESE** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 31-07-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **tss** ## **W.P.(C) NO.22954/2008** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:-** ## **P1:- COPY OF THE APPLICATION FILED BY THE PETITIONER DTD. 8.1.07 BEFORE THE PERMANENT LOK ADALAT, THIRUVANANTHAPURAM.** **P2:- COPY OF THE OBJECTION DTD. 28.6.07 FILED BY THE IST RESPONDENT BEFORE THE PERMANENT LOK ADALAT, THIRUVANANTHAPURAM.** **P3:- COPY OF THE PROPOSAL FORM (EXT.P2) IN LOK ADALAT) SIGNED BY PETITIONER'S HUSBAND.** **P3(a):- COPY OF THE POLCIY DOCUMENT (EXT.P4) OF THE IST RESPONDENT.** **P3(b):- COPY OF THE REPUDIATION LETTER DTD. 19.6.2006.** **P4:- COPY OF THE AWARD DTD. 15.2.08 IN OP. 98/07 OF THE PERMANENT LOK ADALAT.** **RESPONDENT'S EXHIBITS:-** **R1(a):- COPY OF THE EXTRACT OF FINANCIAL UNDERWRITING OF IST RESPONDENT.** **//TRUE COPY//** **P.A. TO JUDGE** **tss** S.SIRI JAGAN, J. ================== ## W.P.(C).No. 22954 of 2008 ================== Dated this the 31[st] day of July, 2012 J U D G M E N T The petitioner's husband took an insurance policy for ` 5 lakhs from the 1[st] respondent insurance company, on 21.2.2006. The petitioner's husband died on 19.3.2006, 26 days after taking the policy, at the age of 42 years on account of heart attack. On the basis of the policy, the petitioner submitted a claim for the policy amount of ` 5 lakhs. The insurance company repudiated the claim for the insurance amount on the ground that the petitioner's husband did not disclose the existence of seven other policies taken by the petitioner's husband and he also wrongly mentioned his annual income as ` 5 lakhs when in fact it was only ` 1.5 lakhs. Challenging the repudiation, the petitioner approached the Permanent Lok Adalath, Thiruvananthapuram. By Ext.P4 order, the Permanent Lok Adalath upheld the contention of the insurance company that the petitioner's husband failed to disclose the facts that he had seven other policies and suppressed the fact that the annual income was only ` 1.5 lakhs by stating that his annual income as ` 5 lakhs. Accepting the contention of the insurance company that as per their policy, the sum assured could only be 12 times the annual w.p.c.22954/08 - : 2 :- income, since the other seven policies added to ` 16.5 lakhs, the Permanent Lok Adalath directed the insurance company to pay to the petitioner ` 1.5 lakhs, which would have been the risk the insurance company could have undertaken as per their standard norm, had the petitioner's husband revealed the facts that he had seven other policies for ` 16.5 lakhs and his annual income was only ` 1.5 lakhs. Ext.P4 is the award of the Permanent Lok Adalath. The petitioner is challenging the same to the extent it confines relief to the petitioner to ` 1.5 lakhs instead of ` 5 lakhs. 2. The petitioner's contention is that the non-disclosure of the factum of seven other policies and the factum that the petitioner's husband's annual income was only ` 1.5. lakhs were not material to the risk undertaken by the insurance company, since those facts do not have any relevance to the risk to the life of the policy holder. The petitioner would contend that the insurance company had never disclosed to the petitioner's husband that as per their policy, they could only give only 12 times the annual income as the sum assured and, therefore, the insurance company is also guilty of suppression of material facts from the petitioner's husband. It is submitted that as far as the w.p.c.22954/08 - : 3 :- 1[st] respondent insurance company is concerned, taking the annual income of the insured as ` 1.5 lakhs, they could have very well fixed ` 5 lakhs as the sum assured, for which, it is not necessary to take into account the other insurance policies held by the petitioner's husband insofar as those policies were from other insurance companies. Therefore, according to the petitioner, the reason for repudiation of the claim of the petitioner is totally unsustainable. As such, the Permanent Lok Adalath ought to have directed the insurance company to pay the entire sum assured, viz., ` 5 lakhs, is the contention raised by the petitioner. 3. A counter affidavit has been filed by the respondents, wherein the stand taken is that insofar as a contract of insurance is of utmost good faith, the petitioner's husband was bound to disclose the facts that his annual income was only ` 1.5 lakhs and he had taken seven other policies on his life, which was material for undertaking the risk undertaken by them for ` 5 lakhs. According to them, as per their policy, they fix the sum assured as 12 times the annual income of the insured. They would contend that had the company known that the annual income of the petitioner's husband was only ` 1.5 lakhs and he had seven w.p.c.22954/08 - : 4 :- other policies for ` 16.5 lakhs, they would have undertaken the risk only for ` 1.5 lakhs and not for ` 5 lakhs. Therefore, the non-disclosure of the facts by the petitioner's husband was material to the risk undertaken by them. On that ground, they would take the stand that the repudiation was valid and sustainable. 4. When the matter was taken up for hearing earlier, in view of the assertion of the respondents that the policy of the company is to give only 12 times the annual income of a person aged 42 years as the sum assured, I directed the respondents to produce basis for such a submission. The respondents have produced Ext.R1(a). According to them, Ext.R1(a) contains the policy decision of the company, as per which, for persons aged between 34 and 45, the total sum assured allowable is 12 times the annual income. The petitioner would contend that Ext.R1(a) was never disclosed to the petitioner's husband and, therefore, the insurance company is also guilty of non-disclosure of material facts to the petitioner's husband. The petitioner also relies on the following decisions in support of her contentions: 1. **Shivji v. Hiralal** , AIR 1984 Madhya Pradesh 131, 2. **Kuni Lata Sahoo v. Senior Divisional Manager, LIC of** w.p.c.22954/08 - : 5 :- **India** , AIR 2010 Orissa 19, and 3. **Life Insurance Corporation of India v. Shakuntala Bai** , CDJ 1973 APHC 095. The insurance company relies on the following decisions in support of their contentions: 1. **United India Insurance Co. Ltd., v. Pushpalaya Printers** , (2004) 3 SCC 694, 2. **Life Insurance Corporation of India. v. Asha Goel** , (2001) 2 SCC 160, and 3. **Chacko v. L.I.C.** , 2008 (1) KLT 698 (SC). 5. I have considered the rival contentions in detail. 6. It is not disputed before me that the petitioner's husband did not disclose the fact that the petitioner's husband already had seven other policies on his life for a total sum assured of ` 16.5 lakhs. It is also not disputed before me that for the relevant period, as per the income tax returns filed by the petitioner's husband, he had disclosed his annual income as ` 1.5 lakhs only and in fact he had disclosed a total income of ` 5 lakhs per year in the proposal form submitted by the petitioner's husband. In view of the same, the only question to be considered is whether the non-disclosure of those facts would materially w.p.c.22954/08 - : 6 :- affect the risk undertaken by the insurance company. For that, essentially I have to consider the question as to whether I can accept the contention of the insurance company that as per the company's policy, the sum assured allowable for a person aged 42 years is only 12 times the annual income of the insured. The respondents have produced Ext.R1(a) which would go to show that they had an internal policy to restrict the sum assured on the basis of age and, as per the said policy, for a person aged 42 years, the sum assured permitted is only 12 times the annual income. The petitioner's contention that the same was not disclosed to the petitioner's husband and, therefore, it cannot be pressed into service does not appear to be acceptable. The question of disclosing anything to the petitioner's husband arises as per the contract. The contract is the policy document. For fixing the sum assured, it is not necessary to disclose the policy of the company in respect of the same. Relying on the decision of the Andhra Pradesh High Court in **Shakuntala Bai's** case (supra), the learned counsel for the petitioner would argue that that fact should have been disclosed to the petitioner's husband and since it has not been disclosed, it cannot be pressed into service for repudiating the claim. But the learned counsel for the w.p.c.22954/08 - : 7 :- petitioner could not give any satisfactory answer to the question as to when and at what stage, the insurance company should disclose it to the petitioner's husband. The proposal is to be submitted by the petitioner's husband to the insurance company and not vice versa. It was perfectly open to the petitioner's husband to inquire with the company as to the relevance of the particular question in the proposal form. When the petitioner's husband submitted the proposal form, there is no occasion for the insurance company to disclose anything to the petitioner's husband unless he asks for the same. As such, I do not think that the insurance company is guilty of non-disclosure of any material fact to the petitioner's husband. 7. The next question is as to whether the non-disclosure of the two facts would affect the risk undertaken by the insurance company. I have already accepted the policy of the company in the matter of fixation of the sum assured as 12 times the annual income of a 42 year old man. The next question then would be whether the non-disclosure of the existence of the other insurance policies and the real annual income would have affected the risk undertaken by the respondents. In view of the policy decision of the company, if the petitioner's husband had w.p.c.22954/08 - : 8 :- disclosed those two facts, certainly the officer of the company who processed the proposal of the petitioner's husband could not have fixed the sum assured as ` 5 lakhs and it could only have been fixed as ` 1.5 lakhs. Therefore, non-disclosure/suppression of material facts certainly materially affected the risk undertaken by the insurance company. They have undertaken the risk for ` 5 lakhs, which would only have been for ` 1.5 lakhs if the petitioner's husband had disclosed those facts. Even going by the decisions relied on by the petitioner, if the non-disclosure materially affects the risk undertaken by the insurance company, the repudiation is valid. Therefore, since the suppression of material facts materially affected the risk undertaken by the insurance company, I am of opinion that the repudiation does not suffer from any infirmity whatsoever. However, in view of the fact that the respondents have not chosen to challenge Ext.P4 order of the Permanent Lok Adalath, the direction of the Adalath to pay ` 1.5 lakhs would stand. The writ petition is disposed of as above. Sd/- sdk+ S.SIRI JAGAN, JUDGE ///True copy/// P.A. to Judge w.p.c.22954/08 - : 9 :-