District Commission Must Refer Points Of Difference To Third Member If Two Presiding Members Don't Agree: Uttarakhand State Commission

Proviso to Section 14(2A) provides that “Provided that where the proceeding is conducted by the President and one member and they differ on any point or points, they shall state the point or points on which they differ and refer the same to the other member for hearing on such point or points and the opinion of the majority shall be the order of the District Forum.”

The State Commission held that the points of difference were not mentioned to the third member while referring to the matter. Consequently, the order was set aside and the case was remanded for a fresh decision on merits.

Brief Facts:

The Complainant's late wife had taken a 'Jeevan Saral' insurance policy from Life Insurance Corporation of India (“LIC”). The policy had a maturity date of February 9th, 2028. At the time of obtaining the policy, she was in good health, as verified by the LIC's authorized doctor.

During the validity of the policy, she fell ill and was treated at Metro Hospitals & Heart Institute and other hospitals. Unfortunately, she passed away on January 11th, 2014, in New Delhi. Following her death, the Complainant submitted a claim to LIC, providing all necessary documents. However, on October 30th, 2014, LIC repudiated the claim.

LIC argued that the policy was issued based on utmost good faith and that the deceased had a duty to disclose all relevant health information when submitting the proposal form. It claimed that the deceased had concealed material facts about her health, specifically a pre-existing condition for which she had been treated and operated upon. This breach of trust led to the cancellation of the policy, as the concealment of her medical history violated the policy terms. Through investigation, LIC discovered, that she had undergone surgery for posterior fossa epidermoid at A.I.I.M.S., New Delhi, in 2004 and she failed to disclose it.

The District Commission initially dismissed the consumer complaint. However, there were differing opinions among the District Commission's members. The President of the District Commission dismissed the complaint, while the Male Member allowed it. Later, the Female Member agreed with the Male Member, leading to the allowance of the consumer complaint by the District Commission.

Feeling aggrieved, LIC filed an appeal before the State Consumer Disputes Redressal Commission, Uttarakhand (“State Commission”). It contended that the judgments passed by the District Commission were flawed and not legally binding. The President and Male Member of the District Commission issued conflicting judgments on October 20, 2015. The President dismissed the consumer complaint, while the Male Member allowed it, awarding Rs. 2,50,000/- with interest. Later, the Female Member confirmed the Male Member's decision on February 22, 2019, without following the proper procedure under Section 14(2A) of the Consumer Protection Act, 1986. LIC argued that neither the formal points of difference were identified, nor was there a proper hearing by the third member.

Observations of the Commission:

The State Commission observed that the President and Male Member of the District Commission had passed differing judgments on October 20, 2015, without stating the points of difference. As per Section 14(2A) of the Consumer Protection Act, 1986, the points of difference should have been stated and referred to the third member for hearing. The State Commission found that the District Commission failed to follow this procedure.

The record showed that the case was fixed for arguments before the third member from February 6, 2016, to December 17, 2016, but neither party appeared during this period. On March 4, 2017, LIC's counsel did not appear, and on March 15, 2017, both parties appeared, and the matter was fixed for re-arguments. LIC moved an application on May 15, 2017, to examine the signatures on the discharge summary, but this application was not disposed of before the final order was passed on February 22, 2019.

The State Commission concluded that the judgments and orders from October 20, 2015, and February 22, 2019, were legally unsustainable and should be set aside. As a result, LIC's appeal was allowed and the case was remanded to the District Commission for a fresh decision on merits, after providing a proper hearing to the parties.

Case Title: Life Insurance Corporation of India vs Sh. Kailash Chand Joshi

Case No.: First Appeal No. 111 of 2019

Advocate for the Appellant: Sh. T.S. Bindra

Advocate for the Respondent: Sh. Shree Gopal Narsan

Date of Pronouncement: 18.07.2024