IMPORTANT POINTS
(1) Policy Document – Any ambiguity in policy documents, especially those regarding disclosure requirements, must be interpreted contra proferentem, favouring the insured.
(2) Same cause of Action – Compensation in the form of interest element of 7% is already granted and multiple compensations are inadmissible for the same cause of action.
(3) Insurance Claim – As the insurer neither clarified the specifics of required disclosures nor substantiated its claim with proper evidence, the repudiation of the insurance claim cannot stand.

ORDER

This common order addresses four Revision Petitions, No. 998 & 1023 of 2020 filed by IDBI Federal Life Insurance Co. Ltd. and 427 & 428 of 2021 filed by Lakkha K. Panjabi, under Section 21(b) of the Consumer Protection Act, 1986. These petitions challenge orders dated 29.07.2020 passed by the learned State Consumer Disputes Redressal Commission, Gujarat (‘State Commission’) related to Appeal Nos. 1072 and 1015 of 2015. Vide this Order, the State Commission reduced 50% of the claim amount along with an interest @ 7% p.a. from the date of repudiation dated 29.05.2012 till realization and modified the orders of District Consumer Disputes Redressal Forum, Ahmedabad (‘District Forum’) dated 31.03.2015.

2. As per report of the Registry, there is some delay in filing of all the Revision Petitions. As the delay occurred during the suspended period of limitation due to Covid-19, all the Revision Petitions are treated to have been filed within limitation.

3. Since the facts and questions of law involved in all the four Revision Petitions are substantially similar, except for variations in dates, events etc., these four Revision Petitions are being disposed of by this common Order. To facilitate clarity and convenience, RP No. 998/2015 is considered as the primary/lead case, with the facts outlined below being extracted from CC No.814/2013.

4. For convenience, the parties are referred to as placed in the original Complaint before the District Forum & State Commission.

5. Brief facts of the case, as per the Complainant, are that the deceased had applied for a life insurance policy on 26.07.2011, which was issued on 04.08.2011 with a coverage of Rs.9,00,000 for a 30-year term. Unfortunately, he died on 01.12.2011 due to cardiac arrest. Following his death, the complainant submitted a death claim to the insurer, along with required documents. The insurer, however, denied the claim on 29.05.2012, citing misrepresentation in the proposal form. Specifically, the insurer claimed that the policyholder had answered ‘No’ or ‘Nil’ to questions regarding prior insurance policies, despite having held an additional insurance policy valued at Rs.9,14,400. The insurer averred that, had they aware about other policy, they would not have issued this policy. The OP contended that this misrepresentation constitutes breach of the duty of utmost good faith, thereby justifying the rejection of the claim under Section 45 of the Insurance Act, 1938. The complainant contended that the insurer’s denial of the claim was baseless, improper, and constitutes deficiency in service and unfair trade practices. Being aggrieved, he filed a complaint before the District Forum seeking Rs.9,00,000 with 10% interest from the date of rejection (29.05.2012), Rs.25,000 as compensation for mental distress, and Rs.15,000 for litigation costs.

6. The OP-Insurance company, in its written version before the District Forum, contended that the policyholder breached the principle of utmost good faith by failing to disclose material facts, specifically prior insurance coverage. This omission constitutes a ground for claim rejection under established legal precedent, as referenced the judgments by the Hon’ble National Commission and the Supreme Court, which emphasize the insured’s duty to fully disclose material information and sought to dismiss the complaint.

7. The learned District Commission in its Order dated 31.03.2015 allowed the complaint with the following order:—

Order

“Complaint filed by the complainant is hereby allowed. It is hereby ordered to the respondents to pay Rs.9,00,000/- with interest @ 9% to the complainant from the date of repudiation dated 29.05.2012 till the date of payment jointly and severally.

Further, respondent to pay Rs.6,000/- to the complainant for mental agony and shock and Rs.5,000/- cost of litigation.” (Extracted from translated copy)

8. Being aggrieved by the Order of the District Forum, both OPs i.e. IDBI Federal Life Insurance Co. Ltd. filed Appeal