A contract of insurance is based on the principle of utmost good faith; the suppression of material facts regarding pre-existing serious ailments in the proposal form justifies the repudiation of the insurance claim.

JUDGMENT

AIR VICE MARSHAL JONNALAGADDA RAJENDRA AVSM VSM (Retd)

1. The present First Appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (“the Act”) against the Maharashtra State Consumer Disputes Redressal Commission, Circuit Bench at Nagpur (“the State Commission”) Order dated 17.11.2017 in Consumer Complaint No. CC/16/10, wherein the complaint filed by the Respondent herein was partly allowed.

2. As per the report of the Registry, there was 35 days delay in filing the present appeal. For the reasons stated in I.A. No. 2814/2018, the delay was condoned by this Commission vide order dated 16.03.2018.

3. For convenience, the parties are referred to as they were arrayed before the State Commission. “Meeradevi,” the wife and nominee of the Deceased Life Assured (DLA) Mr. Vinodkumar Ghanshyamdas Agrawal, is the Complainant/ Respondent. The “HEFC Standard Life Insurance Co. Ltd.” is Appellant/ Opposite Party (OP)/Insurer.

4. Brief facts of the case, as per the complainant, are that the DLA, Late Shri Vinodkumar Ghanshyamdas Agrawal, obtained Life Insurance Policy No. 16380973 from the OP for a sum assured of ₹25,00,000. The proposal form was submitted on 23.10.2013, and ₹26,852 premium was paid. The Complainant, being the wife of the DLA, was the nominee under the policy. Pursuant to the proposal, the OP subjected the DLA to medical examination at its authorised diagnostic centre. Upon being satisfied with the medical reports, the OP accepted and issued the policy on 24.12.2013. During the subsistence of the policy, the DLA expired on 04.03.2014 at Nagpur. The Death Certificate issued by Nagpur Municipal Corporation recorded the cause of death as cardiac arrest. Thereafter, the Complainant submitted a death claim with OP. The insurer sought additional medical records, which, according to the Complainant, were not available as the DLA had not undergone any prior medical treatment. However, vide letter dated 03.09.2014, the OP repudiated the claim alleging suppression of material facts, namely that the DLA was suffering from liver cancer prior to issuance of the policy. Aggrieved by the repudiation, the Complainant approached the State Commission alleging deficiency in service and unfair trade practice, and sought payment of the sum assured along with interest, compensation, and litigation costs.

5. On being issued notice, OP contested the complaint by filing a written version and contended that upon investigation it was revealed that the DLA was suffering from liver cancer and had taken treatment at Rashtrasant Tukdoji Regional Cancer Hospital & Research Centre, Nagpur. This was well prior to the submission of the proposal form for the policy in question. However, the DLA deliberately supressed this material health condition and answered “No” to specific questions in the proposal form relating to serious illness, hospitalization, and medical investigations. He thus suppressed material facts. On this basis, the insurer justified repudiation of the claim.

6. The learned State Commission vide Order dated 17.11.2017 partly allowed the complaint with the following observations: -

“6. On the other hand, it is contended on behalf of the complainant that the deceased has undergone medical test at t