1. This complaint under Section 17 of the Consumer Protection Act 1986, the, has been filed by Ms. Zohra Malik resident of Ghaziabad, Uttar Pradesh, for short complainant, against the Aegon Religare Life Insurance Company Pvt. Limited, hereinafter referred to as OPs, alleging deficiency of service and unfair trade practice on the part of the OPs they having repudiated the claim preferred consequent upon the demise of her husband, the insured, she being his sole nominee and praying for the relief as under:-

a. Direct the OP to pay the claim amount of Rs. 35,00,000/- to the complainant as per the terms and conditions of the policy;

b. Direct the OP to pay Rs. 1,00,000/- towards mental pain, agony, harassment etc.

c. Direct the OP to sum of Rs. 55,000/- towards cost of the proceedings.

d. Pass any other and further relief(s), which this Hon’ble Forum may deem fit and proper in the given facts and circumstances, may also be passed in favour of the complainant and against the OP.

2. Facts of the case necessary for the adjudication of the complaint are these.

3. The husband of the complainant, since deceased, had obtained a policy from the OP, during his life time as per the details indicated as under:- Product Name Algon religare iterm plan (UIN 138N016V03) Policy No. 514400128603 Date of Commencement 07.11.2014 Date of Maturity 06.11.2039 Name of Nominee Zohra Malik (Complainant)

The complainant consequently claimed the insured amount of Rs. 35 Lakhs from the OP, filing the necessary original documents but the OP repudiated the claim on the ground of suppression of material fact with respect to other policies the insured was in possession of. The complainant on the repudiation of the claim having been done, approached the Claim Review Committee, Algon Religare Life Insurance, building no. 3, 3rd floor, unit no.1, NESCO I.T. Park, Western Express Highway, Goregaon (East), Mumbai-63 but all the efforts done in this behalf proved an exercise in futility. This act of the OP according to the complainant is illegal, unlawful, uncalled for unjust, improper arbitrary and against the principles of natural justice.

4. In these circumstances the complaint was filed before this Commission for redressal of their grievances.

5. OPs were noticed and in response thereto they have filed their reply resisting the complaint both on technical ground and on merit stating, inter alia, that the insured had suppressed the material fact about having other policies and thus are in violation of the terms of insurance in which event the claim is not payable. The OPs have placed before this Commission the details of the policies obtained by the insured the intimation of which were suppressed. Those are as under:-

Below are the details of existing policies issued by the Life Assured from Different Insurance Companies.

Below table is reproduced from the proposal form, which shows that there were no details of existing polices mentioned by the Life Assured. There were two questions relating to existing policies, which were not answered in positive.

Below table is reproduced from the claim form, shows that complainant too fraudulently and knowingly suppressed information regarding existing policies availed by the Life Assured.

Particulars of other Life Insurance/Mediclaim Policies held by the Life Assured

Any other information, which consider, would be helpful in the claim evaluation process under this policy

6. The complainant has also filed rejoinder thereafter rebutting the contentions averments contained in the complaint. Both sides have filed their evidence by way of affidavit in support of their pleadings. Their written arguments are also on record.

7. This matter was listed before this Commission for final hearing on 03.02.2021 when the counsel for the parties appeared and advanced their arguments in support of their respective pleadings, the complainant for approval of the claim as submitted consequent upon the demise of the insured and the OPs for the dismissal of the complaint, as the insured had been in violation of the terms of the policy, they having suppressed the details of the polices obtained in addition to the policy in question. I have perused the records of the case and given a careful consideration to the issues involved in the case.

8. Short question in the given case is whether non disclosure of the details of other policy(ies) amounts to violation of the terms of the policy disentitling the complainant for the claim.

9. The ld. Counsel for the complainant argued that non-disclosure of the other policies obtained by the insured, since deceased, is not material.

10. In the present case, the insurer had sought information with respect to previous insurance policies obtained by the assured. The duty of full disclosure required that no information of substance or of interest to the insurer be omitted or concealed. Whether or not the insurer would have issued a life insurance cover despite the earlier cover of insurance is a decision which was required to be taken by the insurer after duly considering all relevant facts and circumstances. The disclosure of the earlier cover was material to an assessment of the risk which was being undertaken by the insurer. Prior to undertaking the risk, this information could potentially allow the insurer to question as to why the insured had in such a short span of time obtained two different life insurance policies. Such a fact is sufficient to put the insurer to enquiry. Learned counsel appearing on behalf of the insurer submitted that where a warranty has been furnished by the proposer in terms of a declaration in the proposal form, the requirement of the information being material should not be insisted upon and the insurer would be at liberty to avoid its liability irrespective of whether the information which is sought is material or otherwise. For the purposes of the present case, it is sufficient for this Court to hold in the present facts that the information which was sought by the insurer was indeed material to its decision as to whether or not to undertake a risk. The proposer was aware of the fact, while making a declaration, that if any statements were untrue or inaccurate or if any matter material to the proposal was not disclosed, the insurer may cancel the contract and forfeit the premium.

11. The Hon’ble Supreme Court of India in the matter of Reliance Life Insurance Co. Ltd. and anr versus Rekhaben Nareshbhai Rathod as reported in II [2019] CPJ 53 (SC) is pleased to hold as under:-

The expression “material” in the context of an insurance policy can be defined as any contingency or event that may have an impact upon the risk appetite or willingness of the insurer to provide insurance cover. In MacGillivray on Insurance Law (Twelfth Edition, Sweet and Maxwell (2012). See Pg. 493 for cases relied upon] it is observed thus:-

The opinion of the particular assured as to the materiality of a fact will not as a rule be considered, because it follows from the accepted test of materiality that the question is whether a prudent insurer would have considered that any particular circumstance was a material fact and not whether the assured believed it so ...‖ Twelfth Edition, Sweet and Maxwell (2012). See Pg. 493 for cases relied upon.

Materiality from the insured’s perspective is a relevant factor in determining whether the insurance company should be able to cancel the policy arising out of the fault of the insured. Whether a question concealed is or is it not material is a question of fact. As this Court held in Satwant Kaur (supra):

Any fact which goes to the root of the contract of insurance and has a bearing on the risk involved would be ―material

Materiality of a fact also depends on the surrounding circumstances and the nature of information sought by the insurer. It covers a failure to disclose vital information which the insurer requires in order to determine firstly, whether or not to assume the risk of insurance, and secondly, if it does accept the risk, upon what terms it should do so. The insurer is better equipped to determine the limits of risk-taking as it deals with the exercise of assessments on a day-to-day basis. In a contract of insurance, any fact which would influence the mind of a prudent insurer in deciding whether to accept or not accept the risk is a material fact. If the proposer has knowledge of such fact, she or he is obliged to disclose it particularly while answering questions in the proposal form. An inaccurate answer will entitle the insurer to repudiate because there is a presumption that information sought in the proposal form is material for the purpose of entering into a contract of insurance.

Contracts of insurance are governed by the principle of utmost good faith. The duty of mutual fair dealing requires all parties to a contract to be fair and open with each other to create and maintain trust between them. In a contract of insurance, the insured can be expected to have information of which she/he has knowledge. This justifies a duty of good faith, leading to a positive duty of disclosure. The duty of disclosure in insurance contracts was established in a King’s Bench decision in Carter v Boehm19, where Lord Mansfield held thus:

Insurance is a contract upon speculation. The special facts, upon which the contingent chance is to be computed, lie most commonly in the knowledge of the insured only; the under writer trusts to his representation, and proceeds upon confidence that he does not keep back any circumstance in his knowledge, to mislead the under-writer into a belief that the circumstance does not exist, and to induce him to estimate the risque, as if it did not exist.‖ It is standard practice for the insurer to set out in the application a series of specific questions regarding the applicant's health history and other matters relevant to insurability. The object of the proposal form is to gather information about a potential client, allowing the insurer to get all information which is material to the insurer to know in order to assess the risk and fix the premium for each potential client. Proposal forms are a significant part of the disclosure procedure and warrant accuracy of statements. Utmost care must be exercised in filling the proposal form. In a proposal from the applicant declares that she/he warrants truth. The contractual duty so imposed is such that any suppression, untruth or inaccuracy in the statement in the proposal form will be considered as a breach of the duty of good faith and will render the policy voidable by the insurer. The system of adequate disclosure helps buyers and sellers of insurance policies to meet at a common point and narrow down the gap of information asymmetries. This allows the parties to serve their interests better and understand the true extent of the contractual agreement. The finding of a material misrepresentation or concealment in insurance has a significant effect upon both the insured and the insurer in the event of a dispute. The fact it would influence the decision of a prudent insurer in deciding as to whether or not to accept a risk is a material fact. As this Court held in Satwant Kaur (supra) (1766) 3 Burr 1905 there is a clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance‖. Each representation or statement may be material to the risk. The insurance company may still offer insurance protection on altered terms.

12. Having regard to the discussion done and legal position explained I am of the considered view that the decision of the OPs repudiating the claim of the complainant, the insured not having furnished the details of the policies obtained by him which details, as observed by their lordships in the matter of Reliance Life Insurance Company Limited and another versus Rekhaben (Supra) are material, the concealment of which amounts to violation of policy, cannot be faulted with and if that be the case the complaint being devoid of merit is dismissed leaving the parties to bear the cost.

13. Ordered accordingly leaving the parties to bear the cost.

14. A copy of this order be forwarded to the parties to the case free of cost as is statutorily required. File be consigned to records.