Judicial Analysis Court Copy Headnote Facts Arguments Court observation

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
Dr. Inder Jit Singh, Presiding Member and
Dr. Sadhna Shanker, Member
Life Insurance Corporation of India – Petitioner
versus
Shankar – Respondent
Revision Petition No. 752 of 2024
(Against Order dated 27.12.2023 in F.A. No. 1591 of 2018 of Karnataka State Consumer Disputes Redressal Commission)
Decided on 4.2.2025

Advocates:
Counsel for the Parties:
For the Petitioners:Ms. Kriti Arona, Advocate (V.C)
For the Respondents:Mr. Naman Dwivedi, Advocate

IMPORTANT POINTS
(1) Full Knowledge – DLA had the full knowledge of pre-existing ailments at the time of filling the proposal form and there was a nexus with preexisting disease and the cause(s) of death.
(2) Proposal form – Insurance Company has duly discharged its burden of establishing non-disclosure/suppression of material facts by the DLA in the proposal form by submitting the requisite medical/treatment records of the regards contentions of the Respondent/Complainant that DLA signed the proposal form.

Headnote:
Consumer Protection Act, 1986 – Section 21(b)[Consumer Protection Act, 2019 – Section 58(1)(b)] – Appeal – Insurance – Life Insurance Corporation of India – Supression of Fact – On facts of the present case the Deceased Life Assured (DLA) suppressed material facts relating to pre-existing ailments in the proposal form, hence the Insurance Company was justified in repudiating the claim. In this case the DLA had the full knowledge of pre-existing ailments at the time of filling the proposal form and there was a nexus with preexisting disease and the cause(s) of death. The argument that DLA signed the proposal form as per advice of the agent is not acceptable. The District Forum gave a well reasoned order to dismiss the complaint and State Commission went wrong in reversing a well-reasoned order of the District Forum. The reliance by State Commission on the physical fitness certificate and observations that Insurance Company ought to have the medical examination of DLA done before issuing the policy are not valid arguments to allow the claim, as the DLA was under obligation to disclose in the proposal from all the material facts relating to pre-existing ailments of which he had the knowledge, but failed to do so. In this case, the Insurance Company has duly discharged its burden of establishing non-disclosure/suppression of material facts by the DLA in the proposal form by submitting the requisite medical/treatment records of the regards contentions of the Respondent/Complainant that DLA signed the proposal form – Thus, if any money has already been paid to the Respondent/Complainant in pursuance to the orders of the State Commission, the same may not be recovered by the Petitioner Insurance Company, which is a public sector undertaking of Central Government. [Paras 10 to 17].
Result: Petition disposed off.

ORDER

The present Revision. Petition (RP) has been filed by the Petitioners against Respondents as detailed above, under Section 58(1)(b) of Consumer Protection Act, 2019 against the order dated 27.12.2023 of the State Consumer Disputes Redressal Commission, Karnataka (hereinafter referred to as the ‘State Commission’), in First Appeal (FA) No. 1591 of 2018 in which order dated 31.7.2018 of District Consumer Disputes Redressal Forum, Bidar (hereinafter referred to as District Forum) in Consumer Complaint (CC) No. 85 of 2017 was challenged, inter alia praying for setting aside the order dated 27.12.2023 of the State Commission.

2. While the Revision Petitioner(s) (hereinafter also referred to as Opposite Party) was Respondent before the State Commission and Opposite Party before the District Forum and the Respondent(s) (hereinafter also referred to as Complainant) was Appellant before the State Commission and Complainant before the District Forum.

3. Notice was issued to the Respondent(s) on 3.4.2024. Parties filed Written Arguments on 20.1.2025 (Petitioner) and 20.1.2025 (Respondent) respectively.

4. Brief facts of the case, as presented by the Petitioner and as emerged from the RP, Order of the State Commission, Order of the District Commission and other case records are that:—

“(i) Shri Avinash s/o Respondent purchased policy for the sum assured of Rs.2,00,000 based on a proposal dated 22.6.2016. While answering the proposal form under Clause 11 regarding personal history, treatment, illness, consultation, etc. answered all of them in the negative. On 28.7.2016, assured died due to Stomach pain and chest pain just within a period of 1 month and 6 days after purchasing the policy.

(ii) Upon investigation of the early claim, it was discovered that Avinash had been suffering from Crohn’s disease before submitting the proposal. He had received treatment at S.B. Medical Centre in June 2016 and had undergone diagnostic procedures in 2013, which showed bowel thickening and Crohn’s disease.

(iii) Due to the concealment of material facts, the Petitioner Insurance Company repudiated the claim vide letter dated 8.9.2017.

5. Vide Order dated 31.7.2018, in the CC No. 85 of 2017 the District Commission has dismissed the complaint.

6. Aggrieved by the said Order dated 31.7.2018 of District Commission, Petitioner(s) appealed in State Commission and the State Commission vide order dated 27.12.2023 in FA No. 1591 of 2018 has allowed the appeal in part and passed the following order:—

“Appeal is allowed in part. Consequently, Impugned Order dated 31.7.2018 passed in Consumer Complaint No. 85/2017 on the file of District Consumer Disputes Redressal Forum, Bidar is set aside and OP is directed to pay the sum of Rs. 2 Lakhs, being the Sum Assured to the Complainant, within three months from the date of this Order.”

7. Petitioner(s) have challenged the said Order dated 27.12.2023 of the State Commission inter alia on following grounds:—

(i) State Commission erred and failed to appreciate that life insurance policies are contracts governed by the terms and conditions incorporated in the policy document as also the provisions of the Insurance Act.

(ii) The claim on the subject policy had been repudiated on sound grounds being suppression of material facts and did not suffer from any unreasonableness of mala fides.

(iii) State Commission erred and failed to observe that Contract of Insurance is a Contract of Utmost Good Faith and the assured is under a mandate to make true and disclosures.

(iv) State Commission erred in ignoring that to accept the risk, to fix amount of premium, duration of premium, duration of policy, policy plan, insurability of the proposer etc., it is very important to know the condition of health of the proposer, premium paying capacity of the proposer ie whose life to be assured.

8. Heard Counsels of both sides. Contentions/pleas of the parties, on various issues raised in the RP, Written Arguments, and Oral Argume