Back
2025 Supreme(Ker) 3032
IN THE HIGH COURT OF KERALA AT ERNAKULAM
MOHAMMED NIAS C.P., J.
HDFC Life Insurance Company Ltd. - Appellant
Versus
Jyothi madhavan u. W/o.late madhu menon – Respondent
WP(C) NO. 42110 OF 2024
Decided on : 28-10-2025
For the Appellant : SHRI.K.J.SAJI ISAAC DR.ELIZABETH VARKEY SRI.JITHIN SAJI ISAAC SHRI.ABHISHEK S. KUMAR SHRI.JOSHUA SEBASTIAN
For the Respondent: SRI.K.P.SREEKUMAR SRI.P.M.SATHEESH
Insurers must communicate proposal acceptance or rejection within specified regulatory timelines; failure to do so waives grounds for non-acceptance raised post-death of the insured.
Headnote:(A) Insurance Regulatory and Development Authority of India (Protection of Policyholders' Interests) Regulations, 2017 - Timelines for policy acceptance and communication - Insurance company delayed communication of rejection, violating regulations and resulting in liability for death benefit claim. (Paras 13, 14, 22, 24)
(B) Insurance Contract - Obligation to process proposals with efficiency - Retention of premium without communication amounts to waiver - Non-acceptance plea after the insured's death is unsustainable. (Paras 13, 18, 22)
Facts of the case:
The petitioner, an insurance company, challenged the Ombudsman's award directing payment of Rs. 1.4 crores for a life policy taken to secure a housing loan after the insured died of COVID-19. The insurer claimed non-issuance due to lack of a medical exam, while the respondent contended they had not communicated non-acceptance timely. (Paras 2-2.4)
Findings of Court:
The insurer failed to communicate the non-acceptance of the insurance proposal and thus is liable to pay the assured sum posthumously to the insured's wife. (Paras 10, 13, 24)
Issues: Whether the insurer can deny a claim on grounds of non-communication of non-acceptance prior to the insured's death and the duty of the insurer to act within regulatory timelines. (Paras 10, 14, 21)
Ratio Decidendi: The court held that the failure to communicate non-acceptance within statutory timelines creates a presumption of acceptance, rendering the insurer liable for the claim. The plea of non-acceptance raised only after the death of the insured is legally untenable. (Paras 13, 14, 24)
Result: Writ petition dismissed, directing compliance with the Ombudsman's award for the payment of the death benefit.
| Table of Content |
|---|
| 1. facts regarding insurance claim dispute (Para 1 , 2) |
| 2. arguments from both the insurer and the respondent (Para 3 , 7 , 8) |
| 3. observations related to decision-making process (Para 4 , 9 , 10 , 11 , 12) |
| 4. legal standards for acceptance and communication of insurance proposals (Para 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20) |
| 5. principles of good faith and prompt communication in insurance law (Para 21 , 22 , 23 , 24 , 25) |
| 6. final decision to dismiss the writ petition (Para 26) |
JUDGMENT :
MOHAMMED NIAS C.P., J.
1. The writ petition is filed by HDFC Life Insurance Company Limited, challenging the award dated 07.11.2024 passed by the Insurance Ombudsman, Ernakulam, on a complaint preferred by the respondent herein. The petitioner is hereinafter referred to as ‘the insurer’ and the late husband of the respondent is hereinafter referred to as ‘the insured’ for brevity.
2. The brief facts necessary for disposal of the writ petition are as follows:-
The Insured (husband of the respondent) died on 11.04.2021 due to COVID-19. He availed a housing loan to the tune of Rs. 1,73,00,000/- in November 2018 from HDFC Bank. To secure the aforementioned loan, he had taken two life insurance policies from HDFC Life Insurance Company Ltd, in addition to the immovable properties owned by him being offered as security. The policies were taken by the insured as insisted by HDFC Bank, which offered the loan, as a mandatory condition for granting the loan. For the sole purpose of insurance premium funding, the insured opened an account bearing No.637607046 with Rs. 2,07,931/- and two insurance policies were subscribed on 30.11.2018.
2.1. The Policy bearing No.20910176 has a maturity value of Rs.30 Lakhs, while Policy No.20924808 has a maturity value of Rs. 1.40 Crores. The premium amount with regard to Policy No.20910176 was also paid on 30.11.2018 by the HDFC Bank Limited directly to the HDFC Life Insurance Company from the loan account No.637607046. It is seen from the transaction history of the aforesaid account with the HDFC Limited that the EMI has been collected by the bank from the account of the insured till May 2021.
2.2. Though the policy, as per proposal No.20924808, was taken in November 2018, the Insurance Company, for reasons best known to them, delayed the issue of a policy against this proposal despite collecting the premium. The wife of the insured/respondent herein, on 26.05.2021, went to the office of the HDFC Standard Life Insurance Company Limited and submitted the claim forms with all proofs for policy No.20910176 and also furnished the details about the second policy in respect of proposal No.20924808. It was only then that the respondent insured was informed that the Insurance Company had not issued the second policy, even though the factum of acceptance of the premium amount in 2018 was acknowledged. It is an admitted fact that proposal No.20924808 was for the purpose of covering all the housing loans in case of the occurrence of any unforeseen events. On 05.06.2021, as requested by the Insurance Company, all the relevant documents concerning the above-stated two policies were submitted. On 17.06.2021, the Insurance Company issued an online communication to the petitioner stating that, as per the confirmation received by their team, the application relating to the above proposal No.20924808 was withdrawn, since the requirements were not submitted within the time limit and the Insurance Company offered to initiate steps for refunding the premium, based on updated NEFT details and the same would be credited within 9 to 14 working days.
2.3. The wife of the insured, feeling aggrieved by the conduct of the Insurance Company, sought the intervention of the grievance officer of the insurer, informing about the unwillingness to accept the proposal of the refund of the premium, demanding that the assured sum be credited to the loan account, so that the uncleared liabilities towards the loan availed of by the deceased could be clea
