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2025 Supreme(Online)(NCDRC) 3179
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
AVM J. Rajendra, Member, Subhash Chandra, Presiding Member
SBI Life Insurance Co. Ltd. – Appellant
Versus
Balwinder Kaur – Respondent
First Appeal No. 818 of 2017 | First Appeal No. 1337 of 2017
For the Appellants/Petitioners: Mr. Kapil Chawla
For the Respondents: Mr. Karan Kapoor, Ms. Srishti Singh
The principle of utmost good faith in insurance requires full disclosure of medical conditions; however, unrelated non-disclosure cannot justify claim repudiation.
Headnote:(A) Consumer Protection Act, 1986 - Sections relating to insurance disputes - Repudiation of claims denied based on non-disclosure of pre-existing health conditions - Claim partly allowed by State Commission. (Paras 5 and 14)
(B) Insurance Law - Principle of utmost good faith - Failure to disclose medical history invalidates the insurance claim under the doctrine of utmost good faith. (Paras 6 and 12)
(C) Evaluation of claims - Repudiation found to lack direct nexus to actual cause of death, thus merit evaluated in line with precedents. (Paras 9 and 10)
Facts of the case:
The complainant’s husband, notable for his service in the State Bank, passed away shortly post-assurance. The insurance dispute arose due to repudiation by the insurers citing undisclosed medical history as grounds for denial.
Findings of Court:
The court upheld the State Commission's decision reaffirming the claim's partial validity, given that the insurer failed to fully consider the context of the contemplated risks at policy issuance.
Issues: Were the grounds for repudiation valid in light of the actual cause of death, and did the prior medical conditions significantly relate?
Ratio Decidendi: The court held that the concealment was not a critical factor affecting the claim’s validity, thus emphasizing the necessity for relevant scrutiny of the circumstances prevailing at the time of the insurance policy issuance.
Result: Both appeals are dismissed.
| Table of Content |
|---|
| 1. details of appeals (Para 1 , 2) |
| 2. insurance claim circumstances (Para 3 , 4) |
| 3. arguments and contentions by parties (Para 6 , 7) |
| 4. evaluation of claim repudiation (Para 9 , 10 , 11) |
| 5. final court decision (Para 12 , 14) |
JUDGMENT
AVM J. RAJENDRA, AVSM, VSM (Retd), MEMBER
1. This First Appeal No. 818/2017 is filed by SBI Life Insurance Co. Ltd. (OP-1) against Shri Balwinder Kaur (Respondent/Complainant) and FA No. 1337/2017 was filed by Shri Balwinder Kaur (Appellant/ Complainant) against SBI Life Insurance Co. Ltd. (Respondent No. 1, 2 & 3/ OP No.1, 2 and 3) and State Bank of Patiala (Respondent No. 4 & 5/ OP-4 and 5). These appeals challenge the State Consumer Dispute Redressal Commission, Punjab (‘State Commission’), Order dated 17.02.2017 in CC/173/2013 allowing the Complaint.
2. While the FA No. 818 of 2017 was filed by SBI Life Insurance Company Limited, the Opposite Parties (OP-1, 2 & 3) insurer against Smt Balvinder Kaur, the complainant, seeking quashing of the order of the State Commission dated 17.02.2017, on the other hand Smt Balvinder Kaur filed FA No. 1337 of 2017 against OP-1, 2 & 3 seeking enhancement of compensation to 100% of the claim. Since the main facts and contentions are substantially similar in both the Appeals, for convenience FA No. 818 of 2017 filed by SBI Life Insurance Company Limited is considered as the lead case.
3. Brief facts of the case, as per the complainant are that her husband Shri Manjeet Singh Rattan (the diseased life assured DLA) had obtained a Housing Loan from State Bank of Patiala under vide Loan Account Nos. 65141649814 and 65141661693. Towards covering the risk of the home loan, he obtained insurance from OP-1, 2 & 3 under RinN Raksha Group Insurance Scheme under Master Policy No. 70000001609 issued to State Bank of Patiala through Membership Form No. 700274203 and 700274205 both dated 04.10.2012 and the risk cover under the Loan Account No. 65141649814 commenced on 07.11.2012 for sum assured of Rs.12,63,646 at inception; and the risk under Loan Account No. 65141661693 commenced on 05.10.2012 for a sum assured of Rs.20,18,880 at inception. Unfortunately, Manjeet Singh Rattan died of heart failure on 24.02.2013 and the complainant preferred her claim with respect to both the policies with OPs-1, 2 & 3 seeking payment towards the home loan granted to her husband the DLA. The complainant’s claim was repudiated by OPs-1, 2 & 3 vide letter dated 31.07.2013. Being aggrieved, she filed CC No. 143 of 2013 before the State Commission seeking payment of claim of Rs.33,86,045 under the insurance policies and Rs.5,00,000 as compensation along with interest @ 12% per annum and Rs.50,000 as costs of litigation. It is the main contention of the complainant that the DLA Shri Manjeet Singh Rattan, who was employed in State Bank of Patiala at the relevant time as Chief Manager died due to sudden heart attack while on duty. The contention of OPs-1, 2 & 3 with respect to the alleged pre-existing medical conditions is entirely false and baseless and that the DLA was in good health condition and his death occasioned due to sudden heart attack. She contested that she is entitled for relief under both the policies and the grounds of repudiation are entirely untenable.
4. On issue of notice, the OPs-1, 2 & 3 filed a joint written version specifically refuting the contentions of the complainant. OPs-1, 2 and 3 have admitted that towards covering the risk of the home loan granted, the DLA had obtained insurance under RinN Raksha Group Insurance Scheme under Master Policy No. 70000001609 issued to State Bank of Patiala through Membership Form No. 700274203 and 700274205 both dated 04.10.2012 and the risk cover under the Loan Account No. 65141649814 commenced on 07.11.2012 for sum assured of Rs.12,63,646 at inception; and the risk under Loan Account No. 65141661693 commenced on 05.10.2012 for a sum assured of Rs.20,18,880 at inception. OPs-1, 2 & 3 contended that the declaration of good health s
