IMPORTANT POINTS
(1) Burden of proof – Insurance is a contract of utmost good faith, but the burden of proving that the insured suppressed material facts lies strictly on the Insurer. Exclusionary clauses and allegations of pre-existing diseases must be proved by cogent, credible evidence. In cases of ambiguity, the benefit of the doubt goes to the insured.
(2) Limited Scope of Revisional Jurisdiction – Under Section 21(b) of the Consumer Protection Act, 1986, the NCDRC has limited jurisdiction. It cannot reassess evidence or interfere with concurrent findings of fact recorded by the District Forum and State Commission unless there is a clear jurisdictional error, material irregularity, or the findings are perverse.

JUDGMENT

AVM Jonnalagadda Rajendra, AVSM, VSM (Retd), Member.—This Revision Petition has been filed under Section 21(b) of the Consumer Protection Act, 1986 (the “Act”) against the Andhra Pradesh State Consumer Disputes Redressal Commission at Vijayawada (“State Commission”) order dated 22.10.2019 in FA No. 529/2016 wherein the State Commission dismissed the Appeal filed by the OPs and affirmed the District Consumer Disputes Redressal Forum, Chittoor, (“the District Forum”) order dated 03.08.2016 which partly allowed the complaint.

2. For convenience, the parties are referred to as placed in the original Complaint filed before the District Forum.

3. Brief facts of the case, as per the complainant, are that his father Shri Dharmendra Reddy, during his lifetime had taken life insurance for a total sum of Rs.10,00,000 under five life insurance policies of Rs.2,00,000 each from the opposite parties (OPs) vide Policy No. 844214325 dated 20.08.2009; Policy No.844214326 dated 26.08.2009; Policy No.844214327 dated 28.08.2009; Policy No. 844214328 dated 26.08.2009; and Policy No. 844214329 dated 28.08.2009. In the said policies, the complainant, who was a minor at the relevant time, was nominated as beneficiary. While his mother, M. Kantharani was recorded as the guardian. Shri Dharmendra Reddy died on 20.12.2010 leaving behind the complainant and his mother, and as on the date of death all the aforesaid policies were in force. The complainant was born on 10.06.1997 and attained majority in the year 2015. While the other policies taken by the deceased were settled by OP-1, the claims filed by the complainant’s mother as guardian under the aforesaid policies were repudiated by the OPs on the grounds of prematurity and suppression of material facts regarding health. Despite appeals dated 20.04.2011 before the Zonal Office, South Central Zone, Jeevan Bagh, Secretariat, Hyderabad, and thereafter before the Central Office, Mumbai, the claim was repudiated with advice to approach the Insurance Ombudsman. The claims were ultimately rejected by order dated 19.01.2015 on the basis that the insured had undergone treatment from 13.03.2008 to 15.03.2008 at NIMHANS Hospital, Bangalore, for alcohol dependence syndrome. The complainant contended that such repudiation is arbitrary and without legal basis, as the insured had been medically examined by the doctors of the OPs prior to the issuance of policies and was duly certified to be hale and healthy, without any subsisting ailment or suppression of material facts at the time of proposal. The rejection of the claims without examining the treating doctors constitutes deficiency in service on the part of the OPs. He thus files a consumer complaint before the District Forum seeking sum assured of all the policies along with interest, compensation and litigation costs.

4. The OPs, in their written version, contended that all the policies were obtained by the insured through misrepresentation and the insured concealed material facts about his alcoholism and liver disease at the time of submitting the proposal forms. The insured was a chronic alcoholic and suffered from liver diseases such as sepsis and Acute Pancreatitis and Alcoholic Hepatitis. The insured’s death on 20.12.2010 after purchasing the policies supports their claim that he concealed his medical condition. Based on these grounds, the insurance company has rejected the complainant’s claim, asserting that they are not liable to pay the amounts under the disputed policies.

5. The learned District Forum vide Order dated 03.08.2016 partly allowed the complaint with the following directions:-

“27) In the result, the complaint is partly allowed, directing the opposite parties 1 and 2 jointly and severally to pay a sum of Rs.10,00,000/- (Rupees ten lakhs only) i.e., Rs.2,00,000/- under each policy with interest at 9% p.a. from the date of repudiation i.e., 31.03.2011, till realization and the opposite parties 1 and 2 jointly and severally directed