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2025 Supreme(Online)(NCDRC) 3530
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
AVM J. Rajendra, PRESIDING MEMBER, Mr. Anoop Kumar Mendiratta, MEMBER
E. Sashi Kala – Appellant
Versus
The Branch Manager, Life Insurance Corporation of India – Respondent
Revision Petition No.1967 of 2024 | Appeal No.107/2021
For the Appellants/Petitioners: Mr. Thakur Kiran Singh
For the Respondents: Mr. Soumyajit Pani, Mr. Aishwary Bajpai
Insurance contracts demand utmost good faith; nondisclosure of material facts can void policies.
Headnote:(A) Consumer Protection Act, 2019 - Section 58(1)(b) - Insurance Policy - Claim repudiation - The nominee of the deceased life assured claimed benefits under a policy which was repudiated on grounds of non-disclosure of material facts related to health conditions - The Supreme Court principles of utmost good faith and material non-disclosure were upheld - The deceased's pre-existing ailments were not disclosed in the proposal form, resulting in the voiding of the policy, pursuant to Section 45 of the Insurance Act. (Paras 11-14)
(B) Insurance contract - Nature of obligations - The contractual obligation requires the insured to disclose all material facts that could influence the insurer's decision to underwrite a policy. (Para 12)
Facts of the case:
The complainant's late husband held a life insurance policy for Rs.3,00,000 and died shortly after due to undisclosed health issues; the insurer repudiated the claim citing fraudulent nondisclosure.
Findings of Court:
The State Commission upheld the repudiation based on evidence of non-disclosure found in medical records, affirming that the death occurred shortly after policy acquisition.
Issues: Whether the deceased concealed material health facts during the insurance proposal process.
Ratio Decidendi: The court reaffirmed that insurance contracts require full disclosure of material facts; the deceased's omission of his medical history rendered the policy void.
Result: Revision Petition dismissed.
| Table of Content |
|---|
| 1. details on insurance policy and claim. (Para 1 , 3 , 4) |
| 2. arguments from both parties concerning claim validity. (Para 6 , 8 , 9) |
| 3. establishment of legal principles regarding nondisclosure in insurance. (Para 11) |
| 4. court's discussion on nondisclosure and claim denial. (Para 12 , 13) |
| 5. conclusion of the court's judgment. (Para 14 , 16) |
JUDGMENT
AVM J. RAJENDRA, AVSM, VSM (RETD.), PRESIDING MEMBER
1. This Revision Petition has been filed under Section 58 (1)(b) of the Consumer Protection Act, 2019 , challenging the order dated 27.03.2024 passed by the Telangana State Consumer Disputes Redressal Commission, Hyderabad ("State Commission") in F.A. No. 107/2021 which allowed the Appeal filed by OPs and setting aside the District Consumer Disputes Redressal Forum, Sangareddy ("District Forum") order dated 12.12.2020, which partly allowed the Complaint.
2. For convenience, the parties are referred to as placed in the Consumer Complaint filed before the District Commission.
3. Brief facts of the case, as per the Complainant, are that her late husband, E. David had obtained Life Insurance Policy No. 606735525 from the Opposite Parties (OP-Insurer) for an assured sum of Rs.3,00,000/- commencing on 10.12.2018, naming her as the nominee. Following her husband's illness, he was admitted to Osmania General Hospital on 21.01.2019 and 22.01.2019, where he was declared dead due to a massive heart stroke. As the nominee, she claimed the policy benefits but was surprised when the OPs repudiated her claim on the grounds that the policyholder had concealed material facts while making the policy proposal. Consequently, she filed a Consumer Complaint before the District Forum seeking payment of policy amount of Rs. 3,23,000 with 24% interest, compensation of Rs.1,00,000, and costs of Rs.50,000/-.
4. On issue of notice, The Opposite Parties, in their Written Version filed before the District Commission, admitted issuing the policy in question. However, upon receiving the death intimation, their investigation into the claim revealed that the Deceased Life Assured was a known case of epileptic seizures, he was an alcoholic and gutka consumer, and had been suffering from epileptic seizures for which he was prescribed tablet Eptoin 100 Mg for two months prior to the proposal date (but had stopped the medication). The OPs contended that this material health information was withheld during the proposal process. Had it been disclosed, they would not have accepted the risk or issued the policy. They contended that the policy was thus fraudulently obtained by non-disclosure of material facts and, therefore, liable to be voided. Accordingly, they repudiated the claim vide letter dated 19.08.2019 and prayed for complaint's dismissal with costs.
5. The learned District Forum vide Order dated 12.12.2020 partly allowed the complaint and granted the following relief:-
“9) In the result the complaint of the complainant is partly allowed directing the opposite parties no. 1 and 2 jointly and severally:-
1) to pay the complainant the assured sum of Rs.3,00,000/- under the policy.
2) to pay a sum of Rs. 3,000/- towards compensation for mental agony and trauma undergone by the complainant.
3) to pay a sum of Rs 2,000/- towards costs of litigation.
Time for compliance: (45) days from the date of receipt of copy of this order
In case of non compliance of the order within the stipulated time, the complainant is entitled for interest @9%p.a. on Rs.3,00,000/- from the date of complaint i.e. 23.01.2020 till the date of realization.
(Extracted from True copy)
6. Being aggrieved by the Order of the learned District Commission, the OPs filed First Appeal No.107 of 2021 and the State Commission vide order dated 27.03.2024 allowed the Appeal, set aside the order of the District Commission dated 12.12.2020 and dismissed the complaint with the following observations:
“10. Having heard the submissions of the learned counsel appearing for the insurance company and the Respondent i
