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Sunday, August 11, 2013

When policy is only for Graduates - an 8th standard person can not apply for it - misstatement as B.Com., comes to material suppression- No claim =“Whether the insured is bound to explain the correct educational qualifications before the Insurance Company, when that insurance is meant only for Graduates?”. - yes = It is thus clear that there are two categories, one for Graduates and the other for Non-Graduates. The mis-statement made by the deceased go to the root of the case and violate the basic principle of ‘utmost faith’, which obviously forms the corner stone of any insurance contract. Due to this mis-statement, the complainant is not entitled to any claim. The Hon’ble Apex Court, in the case of Satwant Kaur Sandhu Vs. New India Assurance Co. Ltd., reported in IV (2009) CPJ 8 (SC), was pleased to hold that : “The term “material fact” is not defined in the Act and, in therefore, it has been understood and explained by the Courts in general terms to mean as any fact which would influence the judgment of a prudent insurer in fixing the premium or determining whether he would like to accept the risk. Any fact which goes to the root of the Contract of Insurance and has a bearing on the risk involved would be “material”. Nonetheless, it is a contract of insurance falling in the category of contract ‘uberrimae fidei’, meaning, ‘a contract of utmost good faith, on the part of the assured’. Thus, it needs little emphasis that when an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge. It is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not. Of course, obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known. The obligation to disclose necessarily depends upon the knowledge one possesses. - As stated in Pollock and Mulla’s Indian Contract and Specific Relief Acts, any fact, the knowledge or ignorance of which would materially influence an insurer in making the contract or in estimating the degree and character of risks in fixing the rate of premium, is a material fact”. - In view of this discussion, we allow the revision petition, set aside the orders rendered by both the fora below and dismiss the complaint. No costs.

published in http://164.100.72.12/ncdrcrep/judgement/00130807110259672RP344212.htm
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
NEW DELHI


REVISION PETITION NO. 3442 OF 2012
(From the order dated 13.07.2012 in Appeal No. 911/2011  of
State Consumer Disputes Redressal Commission, GUJARAT )



MetLife India Insurance Co. Ltd.  
Through its Chief Manager – Legal
Brigade Seshamahal, 5-Vani Vilas Road
Basavanagudi, Bengaluru – 560 004                        …Petitioner

Versus
Pragnaben Rajesh Batunge
Single Chalik, Chharanagar
Kubernagar Bunglow Area Road
Ahmedabad – 382 340                                             …Respondent    

BEFORE:
      HON'BLE MR. JUSTICE J.M. MALIK, PRESIDING MEMBER
      HON’BLE DR. S.M. KANTIKAR, MEMBER
       
For the Petitioner      : Mr. Saurabh Kansal, Advocate

For the Respondent  : N E M O


PRONOUNCED ON_1st  AUGUST, 2013

ORDER

JUSTICE J.M. MALIK
1.        The question involved in this case is 
“Whether the insured is bound  to explain the correct educational qualifications before the Insurance Company, when that  insurance is meant only for Graduates?”. 

2.      Rajesh Batunge, the insured/deceased, obtained a ‘Death Insurance Policy’ from MetLIfe India Insurance Co.Ltd., the respondent/opposite party.  
The duration of the policy was from 31.03.2005  to 31.03.2025, i.e. for 20 years.  
This was one of the stipulations of the policy that in case the insured died during the currency  of  the insurance  policy, the insurance company would pay the entire amount  of  policy in the sum of Rs.7,50,000/-. 
The insured died on 20.10.2005.  
The claim was made  by  his wife, Smt.Prgnaben Rajesh Batunge.  
The claim made by  Smt.Prgnaben Rajesh Batunge,  the complainant, was repudiated on the ground that the insured had mentioned his wrong educational qualifications.  
He had declared that he was ‘B.Com’,  but he had studied upto 8th Standard only.

3.      A complaint  case was filed before the District Forum.  
The District Forum allowed the complaint and directed the OP to pay the complainant a sum of Rs.7,50,000/- along with 9% interest.

4.      Aggrieved by that order, the petitioner/OP  approached the State Commission.  
The State Commission  dismissed the appeal, 
relying upon the affidavit filed by one,  Jeetubhai Bajrang.    
In his affidavit, he stated that, on 01.10.2007, while taking a policy, deceased had  given all  documentary evidence, like School  Leaving  Certificate, Voter’s I.D., etc., to Sandeep  Bagga, the agent of OP1.  District Forum vide its order dismissed the complaint against the opposite Party No.2.  Jeetubhai Bajrang  further stated that the deceased  had  stated that he had studied only up to 8th Standard, but his education qualification was  wrongly mentioned as ‘B.Com’.  
He also signed as a witness to the proposal form. 
The District Forum also directed MetLife Insurance Co.Ltd., to pay the said amount.  OP2 contended that  he had  filled-in the form, as per the statement made by the deceased.

5.      From the above  said  discussion, 
it is clear that the words “B.Com” were written in the  presence of Jitubhai Bajrang and the Deceased.  
The Deceased had studied up to 8th standard, he also affixed his signature in English Language.  
He must also be aware of fact,  being  mentioned by the Agent.  
It was the bounden duty of the deceased to  raise  objection and should not have allowed the Agent to mention his incorrect educational qualifications.

6.      We have also gone through the Written Statement filed by the opposite party. 
The written statement in Para 6.1, reads as follows:-
          “6.1. It is further submitted that as per underwriting guidelines, if the academic attainment of the proposer was not graduation, then he would not be covered under the category which is reserved for graduates and he would  not be extended a sum of Rs.7.5 lakhs as insurance cover. Based on late Rajesh Batunge’s actual academic qualifications, he would have been fallen in the category of non-graduates, and the maximum  limit of  the sum assured could  not have exceeded Rs.1.00 lakh”.

7.      It is thus clear that there are two categories, 
one for Graduates  and  the other for Non-Graduates. 
The mis-statement made by  the deceased go to the root of the case and violate the basic principle  of  ‘utmost faith’, which  obviously forms the corner stone of any insurance contract.   
Due to this mis-statement, the complainant is not entitled to any claim.  
The Hon’ble Apex Court, in the case of  
Satwant Kaur Sandhu Vs. New India Assurance Co. Ltd., reported in IV (2009) CPJ 8 (SC),  was pleased to hold that :
The term “material fact”  is not defined in the Act and, in therefore, it has been understood and explained by the Courts in general terms to mean as any  fact which would influence  the judgment of a prudent insurer in  fixing the premium or determining whether he would like to accept the risk. Any fact which goes to the root of the Contract  of  Insurance and has a bearing on the risk involved would be “material”.
         
8.      The Hon’ble Apex court in Satwant Kaur Sandhu (supra)  in Paras 12, 13 & 18, further held as under :-
12..……… Nonetheless, it is a contract of insurance falling in the category of contract ‘uberrimae fidei’, meaning, ‘a contract  of  utmost good faith, on the part of the assured’.  Thus, it needs little emphasis that when an information on a specific aspect is asked for in the proposal form, an  assured  is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge. It is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not.  Of course, obligation to disclose extends only to facts which are known to the applicant  and not to what he ought to have known. The obligation to disclose necessarily depends upon the knowledge one possesses.  His opinion of the materiality of that knowledge is of no moment. (See: Joel Vs. Law Union & Crown Ins. Co. [1908] 2 K.B. 863).
13. In United India Insurance Co. Ltd. Vs. M.K.J. Corporation, III (1996) CPJ 8 (SC)=(1996) 6 SCC 428, this Court has observed that it is a fundamental principle of insurance law that utmost faith must be observed by the contracting parties.  Good faith forbids either party from non-disclosure of the facts which the party privately knows, to draw the other into a bargain, from his ignorance of that fact and his believing the contrary.  (Also see: Modern Insulators Ltd. Vs. Oriental Insurance Co. Ltd., II (2000) SLT 323 = I (2000) CPJ 1 (SC) = (2000) 2 SCC 734).
18.  As stated in Pollock and Mulla’s Indian Contract  and Specific Relief Acts, any fact, the knowledge or ignorance of  which would materially influence an insurer in making the contract or in estimating the degree and character of risks in fixing the rate of premium, is a material fact”.  

9.   In view of  this  discussion,  we allow the revision petition, set aside the orders rendered by both the fora below and dismiss the complaint.  No costs.

..…………………..………J
     (J.M. MALIK)
      PRESIDING MEMBER

                                                               
  ……………….……………
                                                        (DR.S.M. KANTIKAR)
                                                                            MEMBER


Dd/6

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