Insurers cannot repudiate a policy for suppression of facts unless they prove a causal link to the cause of death; mere suppression is insufficient.

JUDGMENT :

MUNNURI LAXMAN, J.

1) Heard learned counsel for the petitioner on admission.

2) The challenge in the present writ petition is to the award dated 03.12.2024 passed by the Permanent Lok Adalat, Chittorgarh in Case No.100/2023, whereunder the claim of the respondent for the policy amount was allowed.

3) Challenging the said award, the respondent filed the present writ petition. For convenience, the ranks of the parties as were referred before the Permanent Lok Adalat, are maintained.

4) The sum and substance of the case of the claimant is that the claimant has obtained Children Money Back Plan vide Policy No.106474476 for assured sum of Rs.3 lacs. The policy period covers from 28.09.2015 to 28.09.2038. The premium was required to be paid yearly. There was default of payment of yearly premium resulting in the lapse of the policy w.e.f. 28.09.2020. The policy was revived w.e.f. 01.10.2021 upon submission of Form No.720. The insured has died on 11.09.2022 due to severe headache and mild fever. The deceased suffered physical disability prior to 10.10.2019. As such, a disability certificate was obtained from the Medical Board under Annexure-4. The respondent/ Insurance Company on knowing the suppression of disability of the insured, vide order dated 25.01.2023, the contract of revival was repudiated for suppression of the fact of disability sustained by the insured on the date of revival of the policy and paid Rs.1,66,181/-, the premium amount.

5) The claimant filed a claim petition before the Permanent Lok Adlat, Chittorgarh for the balance amount of the assured sum.

6) The case of the respondent/Insurance Company show that they did not deny the factum of issuance of policy and revival of the policy. Prior to the revival, the father of the insured has submitted a Declaration of Good Health (DGH) Form dated 25.09.2021 (Annexure-3) whereunder he has suppressed the factum of deceased disability, which is clear from the Disability Certificate dated 10.10.2019. The respondent-Insurance Company has repudiated the contract of insurance for suppression of disability sustained by the insured prior to the revival. The fact suppressed was a pre-existing fact, which is material to the contract of insurance. According to the respondent/Insurance Company, the repudiation was done within 3 years from the date of commencement of revival in terms of Section 44(4) of Insurance Act, 1938 (hereinafter referred to as the “Act of 1938”); and they prayed to dismiss the claim.

7) The Permanent Lok Adalat after conducting summary proceedings allowed the claim by rejecting the defence set up by the respondent/Insurance Company, by placing reliance on the decisions of Hon’ble Supreme Court in the case of Sulbha Prakash Motegaonkar & Ors. Vs. Life Insurance Corporation of India [Civil Appeal No.8245/2015], decided on 05.10.2015. Aggrieved by the same, the present writ petition has been filed by the respondent-Insurance Company.

8) The main submission of the learned counsel for the Insurance Company is that the Permanent Lok Adlat having found that the claimant suppressed the fact relating to the insured medical condition of suffering disability as is clear from the Disability Certificate dated 10.10.2019, allowed the claim contrary to the provisions contained under Section 45 (4) of the Act of 1938.

9) The learned counsel for the Insurance Company further submitted that any suppression of fact, which is not causative factor for causing of death would also amount to material suppression and the Insurance Company is entitled to repudiate such contract of insurance by placing