Non-adherence to insurance proposal procedures invalidates claim repudiation.

1. This Revision Petition has been filed by the Petitioner / Opposite Party No. 2 against Respondent No. 1 / Complainant and Respondent No. 2 / Opposite Party No. 3 challenging the impugned Order dated 21.9.2021 passed by the State Consumer Disputes Redressal Commission, Circuit Bench, Bikaner, in Appeal / 97/2021 (1066/2019). vide such order, the State Commission had allowed the Appeal while setting aside the Order dated 23.9.2019 passed by the District Consumer Dispute Redressal Forum, Bikaner, in Consumer Complaint No. 2/2017.

2. The brief facts of the case are that Complainant's husband, Late Sh. Hanuman Singh had taken a housing loan from the Opposite Party No. 3 for a sum of Rs.16,00,000 on 22.12.2014 and the said amount was insured with Opposite Party No. 1 and 2 vide Policy bearing No. 70000011107 from 23.12.2014 to 23.3.2030, wherein the Complainant stood as the nominee in the Policy. The Complainant's husband passed away on 30.6.2016 and hence, the claim was filed by the Complainant on 26.7.2016. A premium amount of Rs.30,958 was paid till 16.1.2015 and on the date of death, the claim payable was Rs.15,40,434. It was averred by the Complainant that the Policy was issued after medical check - up of the deceased husband. It was further averred that the Complainant through her Counsel issued a Legal Notice to the Respondent and in reply to the same, the Respondents stated that they had repudiated the claim and the premium amount of Rs.55,104 vide cheque bearing No. 359307 dated 6.9.2014 had been refunded. It was further stated that the deceased husband was healthy at the time of insurance and he had neither stated any deliberate lie nor he had suppressed any material information. It was also averred that the deceased was examined by the Doctor appointed by the Respondent and on the basis of his report, the Policy was issued and home loan was secured. It was further contended that the Opposite Party No. 3 pressurized the Complainant for payment of claim and the Complainant was threatened that her house worth Rs.60,00,000 would be auctioned. Hence, it was contended that the repudiation of the claim was arbitrary and such conduct of Respondents amounted to deficiency in service. Hence, the Complaint was filed before the Ld. District Forum seeking payment of Rs.15,40,434, refund of amount collected by the Bank after death of her husband, compensation of Rs.2,00,000 and litigation costs of Rs.5,100.

3. The Opposite Parties No. 1 and 2 appeared before the District Forum and resisted the Complaint and denied all the allegations thereby denying deficiency in service on their part. It was submitted that the DLA had applied for insurance cover through membership No. 7003661899 and the risk commenced on 16.1.2015. It was contended by the Opposite Parties No. 1 and 2 that the Complaint was not maintainable for want of territorial jurisdiction. It was further averred that a Life Insurance Contract is a contract of 'Utmost Good Faith' wherein the proponent is duty bound to disclose everything concerning his / her health, habits and other related matters within his / her knowledge at the time of making the proposal, and even before the commencement of Policy, failing which Insurer has every right to repudiate the claim. In the present case, the Deceased Life Assured had committed breach of the principle of Utmost Good Faith by suppressing material fact that he was suffering from Liver disease and Hydronephrosis prior to the date of submission of the Proposal Form. It was further averred that the DLA failed in his duties to disclose the material facts in the Proposal Form; hence, the contract is void ab init