Judicial Analysis Court Copy Headnote Facts Arguments Court observation

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
AVM J. Rajendra, AVSM, VSM (Retd.) Presiding Member, Anoop Kumar Mendiratta, Member
Manager (Claims) Life Insurance Corporation of India – Appellants
versus
Chanda Devi – Respondent
First Appeal No.34 of 2022
(Against the order dated 23.11.2021 in C.C. No.551/2016 State Consumer Disputes Redressal Commission, Delhi)
Decided on 28.11.2025

Counsel for the Parties:
For the Appellants:Mr. Rajesh Mahindru and Mr. Ashish Singh, Advocates
For the Respondent:Mr. Mohan Kaushik and Mr. Priyanshu Advocates with Respondent in person

IMPORTANT POINTS
(1) The “Three-Year Rule” (Section 45) – Under the amended Section 45, a policy cannot be questioned after three years from issuance or risk commencement on any ground.
(2) Agent’s Responsibility – The Commission reiterated the Supreme Court’s stance: an insured person cannot escape liability by claiming the agent filled the form. When an agent fills a proposal form, they act as the agent of the insured, not the insurer.

Headnote:
Consumer Protection Act – Insurance Act, 1938 – Section 45 – Suppression of Material Facts – Life Insurance – The Deceased Life Assured (DLA) obtained a “Jeevan Mitra” policy in 2011 and died in 2014 due to Chronic Liver Disease – LIC’s Stand: Claim repudiated because the DLA failed to disclose a 2011 hospitalization (Rockland Hospital) where he was diagnosed with Duodenitis, Koch’s Abdomen, and Pancytopenia – Complainant’s Stand – Claimed the policy was beyond the three-year period of questionability and that the insurer’s doctors had certified the DLA as healthy – NCDRC Holding – The DLA was clearly aware of his serious ailments prior to signing the proposal form – Fraudulent suppression was established within the three-year window – Held that insurance is a contract of utmost good faith (Uberrimae Fidei); State Commission’s order awarding Rs.22 Lakhs set aside – Appeal allowed and claim dismissed.

JUDGMENT :

AVM J. Rajendra, AVSM, VSM (Retd.).—The present First Appeal has been filed under Section 51 of the Consumer Protection Act, 2019 (“the Act”) against the Order dated 23.11.2021 passed by the State Consumer Disputes Redressal Commission, Delhi (“the State Commission”) in Consumer Complaint No. 551 of 2016, whereby the Complaint was allowed.

2. There is 15 days delay in filing the present First Appeal. In view of the facts and circumstances of the case, the delay is condoned.

3. For convenience, the parties are being referred to as they were before the State Commission. “Smt. Chanda Devi,” the wife and nominee of the Life Assured Shri Ram (since deceased), is the Complainant/Respondent. The “Life Insurance Corporation of India” (LIC) is Appellant/Opposite Party/Insurer.

4. Brief facts of the case, as per the complaint, are that the husband of the Complainant Shri Ram (“Deceased Life Assured” or “DLA”) had obtained a Life Insurance - Jeevan Mitra Policy No. 125804443 under Table and Term 133-21-21 for a sum assured of Rs.8,00,000. The policy commenced on 28.08.2011, with the risk coverage period from 22.11.2011 to 28.08.2032. The first annual premium of Rs.64,462 was paid at the time of proposal No. 1996 on 09.09.2011. Unfortunately, during the subsistence of the policy, the DLA died on 23.04.2014 due to “Chronic Liver Disease, Acute Gastroenteritis and Anal Fissures.” The Complainant filed a claim on 14.07.2014, but the same was repudiated on 27.11.2015 on the grounds that the insured had allegedly obtained the policy fraudulently by suppressing material facts regarding his health.

5. Aggrieved by the repudiation of her claim and alleging deficiency in service and unfair trade practices, the Complainant filed Consumer Complaint No. 551 of 2016 before the State Commission seeking payment of the remaining claim amount of Rs.22,06,614 along with interest from the date of filing the claim until realization. She also sought compensation of Rs.1,00,000 for negligence and deficient service, and Rs.20,000/- towards litigation costs.

6. On being issued notice, the OPs filed their written version and contended that the DLA was treated at Rockland Hospital from 27.01.2011 to 04.02.2011. Further, even prior to that he was treated, both on an inpatient and OPD basis. During this period, he was diagnosed with Duodenitis with Malabsorption Syndrome, Ileocecal Ulceration, Koch’s Abdomen, and Pancytopenia with Dyslipidemia. The OPs asserted that the DLA failed to disclose these ailments at the time of submitting the proposal form dated 09.09.2011 and thereby procured the policy by suppressing material facts. The OPs further contended that Shri Ram died on 23.04.2014 due to “Chronic Liver Disease, Acute Gastroenteritis, Anal Fissure,” as per the certificate issued by Vinayak Hospital, and the cause of death was related to his earlier undisclosed medical conditions. On these grounds, the claim was repudiated and the OPs denied any deficiency in service or unfair trader practices.

7. The learned State Commission allowed the complaint vide Order dated 23.11.2021 and with the following observations: -

“14. We further find that as per the special provisions of the said policy annexed at page 15 of the complaint, the opposite parties are liable to pay additional amount equal to twice the Sum Assured, in the event of Life assured death prior to the date of maturity of the said policy. It is clear from the evidence on record that the Sum Assured as per the said policy is Rs.8,00,000/-, the date of maturity is 28.08.2032 and the life assured expired on 14.07.2014. Therefore, the opposite parties are liable to pay Rs.24,00,000/- to the complainant as per the said policy conditions.

15. It is clear from the evidence before us that an amount of Rs.1,93,386/- had already been paid to the complainant vide letter dated 28.01.2015. Keeping in view the facts of the present case and the extensive law as discussed above, we direct the Opposite Parties