Case Law
Subject : Insurance Law - Health Insurance
Mumbai : The Bombay High Court, in a significant ruling, has set aside an award by the Insurance Ombudsman and directed Care Health Insurance Ltd. to pay Rs. 17,77,151 to a policyholder whose claim for cancer treatment was repudiated. Justice Sandeep V. Marne found the insurer's grounds for denial—alleged non-disclosure of alcohol consumption and pre-existing hypertension—to be untenable, particularly given the lack of nexus to the diagnosed illness and the insurer's subsequent conduct in offering policy renewal.
The judgment, delivered on May 9, 2025, in the case of
Prakash
Prakash
In July 2022, Mr.
Mr.
Petitioner's Contentions (Argued by Mr. Akshay Patil):
* The policy was merely ported after 17 years of continuous coverage. * Alleged alcohol consumption was not a material non-disclosure and had no nexus with Non-Hodgkin's Lymphoma. * The ground of pre-existing hypertension was not argued before the Ombudsman and, in any case, hypertension (a lifestyle disease) had no connection to the cancer. * The insurer only rejected the claims, not the policy itself. Crucially, the insurer repeatedly offered to renew the policy even after becoming aware of the alleged non-disclosures and Mr.
Insurer's Defence (Argued by Mr.
Justice Marne meticulously examined the insurer's conduct and the Ombudsman's award, finding several flaws.
The Court noted that the insurer was inconsistent in citing reasons for claim denial. The specific pre-existing ailment (hypertension) was not always mentioned, and critically, "ground of non-disclosure of pre-existing ailment of hypertension was never argued by the second Respondent-Insurance Company before the Insurance Ombudsman." (Para 18). The Ombudsman's decision, therefore, only considered the alcohol consumption aspect.
The Court found "absence of concrete material to arrive at a finding that the Petitioner was in the habit of consuming alcohol every day." (Para 23). The proposal form was left blank regarding alcohol, not marked 'No'. Furthermore, the Ombudsman's report itself showed contradictory evidence, citing an ICP document for "daily" consumption but a tele-call recording for "occasional" consumption.
Crucially, the Court emphasized the lack of nexus: > "There is absolutely no evidence on record to indicate that Petitioner’s occasional consumption of alcohol has contributed to cancer... The Insurance Ombudsman has not even made an attempt to establish nexus between Petitioner’s occasional consumption of alcohol and the disease suffered by him." (Para 24) > "Mere occasional consumption of alcohol cannot be a ground for rejection of insurance claim where there is absolutely no nexus between alcohol consumption and cancer suffered by the Petitioner." (Para 27)
Although not argued before the Ombudsman, the Court addressed this ground. It highlighted that the insurer solicited the porting of the policy for Mr.
The Court found it "difficult to believe that non-disclosure of ailment of hypertension by the Petitioner would have affected the mind of the insurer," (Para 33) given they consciously insured an elderly person. It stated: > "There is absolutely zero nexus between the disease of cancer suffered by the Petitioner that of pre-existing ailment of hypertension." (Para 33)
The Court found the insurer's subsequent actions particularly telling. Even after repudiating the claims and acquiring full knowledge of the alleged alcohol habit, hypertension, and Mr.
The Court also noted that the insurer threatened to cancel the policy and forfeit the premium (under Clause 7.1 for misrepresentation) but never actually did so. Instead, they continued the policy and sought its renewal, contradicting the claim that the non-disclosures were material enough to void the contract.
Citing Manmohan Nanda (supra) , the Court reiterated that a fact is material if it would influence a prudent insurer. It found that the alleged non-disclosures in this case did not meet this test, especially given the insurer's readiness to continue and renew the policy.
The High Court set aside the Insurance Ombudsman's award dated June 10, 2024, deeming it "indefensible." Justice Marne stated: > "In my view, therefore rejection of insurance claim by the second Respondent is clearly baseless." (Para 48)
The Court directed Care Health Insurance Ltd. to: > "(II) ...pay to the Petitioner sum of Rs. 17,77,151/- together with interest at the rate of 8% p.a. from the date of filing of the complaint i.e. w.e.f. 14 July 2023." (Para 49)
This judgment serves as a strong reminder to insurance companies that claim repudiation based on non-disclosure requires clear proof of materiality and a direct nexus to the claimed illness. The insurer's own conduct post-discovery of alleged non-disclosures can significantly undermine their defence. It also underscores the judiciary's role in protecting policyholders from arbitrary and inconsistent actions by insurers.
#InsuranceLaw #ClaimRepudiation #BombayHC #BombayHighCourt
Dismissal from BSF Valid Without Security Force Court Trial if Inexpedient Due to Civilians Involved: Calcutta HC
10 Apr 2026
Limitation Under Section 468 CrPC Runs From FIR Filing Date, Not Cognizance: Supreme Court
10 Apr 2026
Higher DA Enhancement for Serving Employees Than DR for Pensioners Violates Article 14: Supreme Court
11 Apr 2026
Broad Daylight Murder of Senior Lawyer in Mirzapur
11 Apr 2026
SC Justice Amanullah: Don't Blame Judges for Pendency
11 Apr 2026
Varanasi Court Seeks Police Report on Kishwar Defamation
11 Apr 2026
Advocate Cannot Stall Execution Over Unpaid Fees or Blackmail Client: Kerala High Court Imposes ₹50K Costs
11 Apr 2026
Supreme Court Slams MP, Rajasthan Over Illegal Sand Mining
14 Apr 2026
Mere DOB Discrepancy Without Fraud or Prejudice Doesn't Warrant Teacher Termination: Allahabad HC
14 Apr 2026
Login now and unlock free premium legal research
Login to SupremeToday AI and access free legal analysis, AI highlights, and smart tools.
Login now!
India’s Legal research and Law Firm App, Download now!
Copyright © 2023 Vikas Info Solution Pvt Ltd. All Rights Reserved.