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2025 Supreme(Online)(SCDRC) 278
STATE CONSUMER DISPUTES REDRESSAL COMMISSION
Sunita Yadav, P, Srikant Pandey, M
Amit Kumar Rajak – Appellant
Versus
S.B.I. Life Insurance Smart Wealth Builder – Respondent
Consumer Complaint | 1381/2017
For the Appellants/Petitioners: KARTIKEY TIWARI
For the Respondents: NITIN JAIN
The insured's failure to disclose material medical conditions leading to claim denial is a breach of the principle of utmost good faith in insurance contracts.
Headnote:(A) Consumer Protection Act, 1986 - Section 19 - Insurance claim - The complaint was dismissed on grounds of non-disclosure of material facts by the insured during policy application - The deceased failed to disclose health issues prior to policy issuance, leading to rejection of claim. (Paras 2, 8, 9)
(B) Policyholder's Duty - The principle of utmost good faith requires disclosure of all material facts in insurance applications - Non-disclosure of medical conditions justified the Insurance Company's repudiation of claim as per established norms. (Paras 8, 9)
Facts of the case:
The complainant's father obtained a life insurance policy, and after the insured's death, the claim was denied due to non-disclosure of prior medical conditions. The District Commission upheld this denial based on evidence presented.
Findings of Court:
The deceased was found to have suppressed critical health information affecting the insurance contract; hence, the decision to reject the claim was justified.
Issues: The key issue was whether the non-disclosure of medical history constituted a breach of the insurance contract principles.
Ratio Decidendi: The court reasoned that the principle of utmost good faith necessitated full disclosure of medical history; the absence of such disclosure warranted the insurer's refusal to honor the claim.
Result: Appeal dismissed.
| Table of Content |
|---|
| 1. facts surrounding the insurance policy and claim. (Para 2 , 3) |
| 2. arguments presented by both parties regarding the case. (Para 5 , 6) |
| 3. court observations and principles of law regarding insured's disclosure. (Para 8 , 9) |
Per say - Justice Sunita Yadav, President.
This appeal by the appellant/complainant (hereinafter referred to as ‘complainant’) is directed against the order dated 22.6.2017, passed by the District Consumer Disputes Redressal Commission, Panna (for short ‘District Commission’), in complaint case No. 32/2016, whereby the District Commission has dismissed the complaint filed by the complainant, 2. Briefly put, the facts of the case, as narrated by the complainant, are that father of the complainant-Sarmanlal Rajajk, had obtained a policy No.K016256209 from the opposite parties-SBI Life Insurance Company (hereinafter referred to as ‘Insurance Company’), on 27.3.2015 and the complainant was the nominee in the said policy. During currency of the policy, insured-Sarmanlal Rajak, died on 23.5.2015. When the complainant preferred a claim for the death benefit, the Insurance Company did not pay the same. Therefore, alleging deficiency on the part of the opposite parties, the complainant approached District Commission by filing the aforesaid complaint, seeking relief.
3. The Insurance Company resisted the complaint and in their reply before the District Commission submitted that office of opposite party No.3 is at Navi Mumbai, therefore the complaint filed before the District Commission at Panna is not maintainable. It is further submitted that the deceased/insured committed breach of principle of utmost good faith, while obtaining the policy by suppressing the material fact that he was suffering from Cerebral Infarct and Cerebral Atrophy, prior to obtaining the insurance policy. The premium amount of Rs.50,000/- paid by the deceased/insured has also been returned to the complainant on 26.5.2015. Thus, there is no deficiency in service on their part and the complaint is liable to be dismissed.
4. The District Commission after appreciating the evidence filed by the parties, dismissed the complaint filed by the complainant.
5. Learned counsel for the complainant argued that the impugned order is perverse and against the settled principle of law. The District Commission has failed to consider the documents and evidence filed by it, therefore, the impugned order be set aside and the relief claimed by the complainant be granted in his favour.
6. On the other hand learned counsel for the Insurance Company argued that the impugned order is in accordance with the evidence and settled principle of law. Therefore, the appeal is liable to be dismissed.
7. Heard and perused the record.
8. It is not in dispute that the deceased/insured died within the policy period. The claim of the complainant was rejected on the ground of suppression of material fact that the deceased Sarmanlal Rajak was suffering from Cerebral Infarct and Cerebral Atrophy, since 19.7.2013 and the said fact was not disclosed in the proposal form. The Insurance Company has filed investigation report along with treatment papers of the Hospital, which corroborate the fact that the deceased/insured was suffering from Cerebral Infarct and Cerebral Atrophy since 2013, i.e. prior to obtaining the policy. The complainant has not filed any evidence to contradict the documentary evidence adduced by the Insurance Company.
9. The National Consumer Disputes Redressal Commission in the case of Branch Manager, LIC of India vs. Jyothi Sudhir 2016(4) CPR 471 (NC) has held that false or inaccurate statement by assured was on a material aspect which influences decision of insurer on whether to accept proposal or not. Insurer was justified in repudiating claim on account of false statement made by assured in proposal form. Under these circumstances the learned District Commission has not erred in holding that the deceased was suffering from aforesaid ailment at the time of
