The insurer cannot repudiate a life insurance claim based on non-disclosure of a previous policy if it failed to verify existing records, as this does not constitute material suppression.

JUDGMENT :

SHEKHAR B. SARAF, J.

1. This is a writ petition under Article 226 of the Constitution of India wherein the petitioner prays for issuance of a writ of certiorari quashing the impugned order dated May 19, 2023 whereby Assistant Secretary/Deputy Secretary/Secretary, Insurance Ombudsman, Lucknow (hereinafter referred to as ‘respondent no.1’) has dismissed the complaint filed by the petitioner against rejection of life insurance claim by the Senior Divisional Manager, Life Insurance Corporation (LIC) Division Office, Prayagraj (hereinafter referred to as ‘respondent no.3’) concerning policy no.205602934 vide impugned order dated March 23, 2021 which has also been challenged. The petitioner further prays to command the respondents to release the amount of insurance claim of his deceased wife in favour of petitioner.

FACTS

2. The factual matrix of the present writ petition is delineated below:

a. On August 16, 2018 the petitioner’s wife, Late Meera Devi (hereinafter referred to as ‘insured’) obtained a life insurance policy from Life Insurance Corporation of India (hereinafter referred to as ‘LIC’), bearing Policy No.205602934, for a sum assured Rs. 15 lakh through an LIC agent. The petitioner, being the husband of the insured, was duly nominated as the nominee in the said policy. Upon deposit of the first premium amounting to Rs.1,15,416/- the policy bond was issued and delivered to the insured through the LIC agent.

b. While applying for the policy, the insured allegedly furnished all the requisite details in the application form in accordance with terms and conditions prescribed by LIC as instructed by the agent. Moreover, it was affirmed that no material information was concealed or misrepresented.

c. Unfortunately, on July 8, 2019 the insured passed away due to a heart attack. Thereafter, petitioner, in his capacity as a nominee, submitted a representation before the Branch Manager, LIC, Phoolpur Branch, Prayagraj seeking disbursement of the insurance claim arising out of the death of his wife.

d. As per the terms and conditions of the LIC policy, upon the death of the insured, the entire sum assured becomes payable to the nominee. In the present case, the petitioner, being the nominee, became entitled to receive the death claim benefits.

e. Accordingly, the petitioner submitted an application requesting disbursement of the death claim under the policy dated August 16, 2018. However, vide impugned order dated March 23, 2021, respondent no.3 repudiated the petitioner’s claim, stating that insured had withheld correct information regarding her previous policy at the time of effecting the present assurance, thereby, violating the disclosure requirements. It was alleged that non-disclosure of such material information constituted concealment, and therefore, the claim was held to be non payable. The petitioner was however, granted liberty to approach the Zonal Manager, Kanpur, in case he was dissatisfied with the rejection of claim.

f. Thereafter, the petitioner submitted an application on April 16, 2021 before the Regional Manager, LIC Kanpur (hereinafter referred to as ‘respondent no.2’), requesting therein for release of the death claim.

g. The petitioner submitted another representation dated July 20, 2021 before the Chairman of Yogkshem Jeevan Beema, Mumbai, seeking redressal against the rejection of the insurance claim pursuant to the order dated March 23, 2021 issued by the respondent no.3.

h. On August 13, 2021, the insurance claim of petitioner's wife was rejected by respondent no.2 on the ground of