The obligation of utmost good faith in insurance contracts necessitates complete disclosure of health history to avoid policy repudiation.

JUDGMENT :

S.G. CHAPALGAONKAR, J.

1. The petitioner takes exception to the order dated 18.4.2024 passed by National Consumer Disputes Redressal Commission, New Delhi passed in F.A. No. 350 of 2016, thereby allowing the complaint Case No. 11 of 2015, filed by respondent for recovery of insurance claim for a sum of Rs. 20 Lakhs towards death of life assured.

2. The respondent - original complainant obtained life insurance policy for his wife effective from 4.7.2011 to July, 2026, on the basis of proposal dated 22.8.2011. The amount of Rs. 20 Lakhs was sum assured. During currency of the policy, she passed away on 20.9.2012. The complainant submitted claim. However, the Life Insurance Corporation rejected the same vide repudiation letter dated 1.3.2013 on the ground that material information was withheld pertaining to health condition. The material part of the repudiation letter reads thus :-

“We may, however, state that all these answers were false as we have evidence and reasons to believe that Life Assured died of Chronic Renal Failure with history of DM for 15-20 years and was on insulin for 2 to 3 years as per consultation sheet of KEM Hospital, Mumbai. There is suppression of material facts. All this history goes prior to the date of commencement of policy; however it is not disclosed in the proposal...”

3. The respondent assailed repudiation of the claim before the Consumer Disputes Redressal Commission, Mumbai, Bench at Aurangabad vide Consumer Complaint No. 11 of 2016. The State Commission, after hearing the parties dismissed the complaint vide order dated 6.5.2016. The petitioner assailed said order in appeal before the National Commission, which has been allowed by the impugned order dated 18.4.2024.

4. Mr. A.D. Kasliwal, learned advocate appearing for the petitioner contends that material information as regards health condition of the deceased-life assured (DLA)/Policy Holder had been withheld in proposal. He invites attention of this Court to the Consultation Sheet dated 12.9.2012 from Department of Nephrology, KEM Hospital, Parel. The DLA was examined. The history of illness records that she is suffering from diabetes for 15 to 20 years and Hypertension since 2 to 3 years. Document shows history to be recorded as per the information given by brother of the DLA.

5. Mr. Kasliwal would further invite attention of this Court to the proposal form which contains various columns. Column No. 3(C) pertains to the previous illness, which is answered as “Yes” with further remark, Diabetes from one year” According to Mr. Kasliwal, when DLA was suffering from diabetes for more than 15 to 20 years, false information regrading health status was supplied. Believing such statement, the insurance policy was issued. He would submit that considering the aforesaid aspects of the matter, the State Commission had rightly dismissed the complaint. However, National Commission erroneously allowed appeal and directed payment of Rs. 20 Lakhs to the complaint towards claim amount. To buttress his submissions, Mr. Kasliwal relied upon the following judgments :-

1] Judgment of the Supreme Court in the case of Reliance Life Insurance Company vs. Rekhaben Nareshbhai Rathod, AIR 2019 SC 2039

2] P.J. Chacko vs. Chairman, Life Insurance Corporation of India and others, AIR 2008 SC 424

3] Satwant Kaur Sandhu vs. New India Assurance Company, 2009 AIR SCW 7213

4] Judgment of the National Commission dated 9.2.2024 in the case of Divisional Manager, Life Insurance Corporation of India through Assistant Secretary vs. Shriraj Amar Mahagaonkar

6. Per contra, Mr. Mayure, learned advocate for the respondent would submit that the DLA had clearly informed that she was suffering from