Back
2025 Supreme(Online)(SCDRC) 2361
STATE CONSUMER DISPUTES REDRESSAL COMMISSION
SMT. MEENA RAMANATHAN, I/c PRESIDENT, SRI. V.V.SESHUBABU, MEMBER – (JUDICIAL)
The Branch Manager, SBI Life Insurance Co., Ltd. – Appellant
Versus
Smt. D.Maramma – Respondent
F.A.No. 722 OF 2021 | C.C.72/2019
For the Appellants/Petitioners: M/s. Srinivas Karra
For the Respondents: Called absent
The court determined that non-disclosure of health issues justified the repudiation of an insurance claim, but the refunded premium must be deducted from the awarded amount.
Headnote:(A) Consumer Protection Act, 2019 - Section 41 - Insurance policy claim - The complainant, being the nominee of the deceased policy holder, filed a complaint claiming death benefits which were repudiated by the opposite party on grounds of suppression of material facts by the policy holder, which was contested by the complainant claiming no suppression. (Paras 1, 2, 5, and 12)
(B) Repudiation of claim - The court found that the repudiation was based on the policy holder’s failure to disclose significant health issues in the proposal form, which was considered a breach of the principle of utmost good faith. (Paras 3 and 10)
(C) Refund of premium - The complainant received a premium refund which the court noted had not been properly accounted for in the District Commission's decision, necessitating modification of the award amount. (Paras 12 and 13)
Facts of the case:
The complainant is the widow of D.Krishnaiah who purchased an SBI Life Policy and claimed the death benefit after his demise, but the claim was rejected due to alleged non-disclosure of health issues, leading to her complaint before the Consumer Commission.
Findings of Court:
The appellate commission upheld the District Commission's decision but modified the compensation considering the refunded premiums.
Issues: The main issues included whether the refund of premium was considered in the award and the validity of the evidence regarding health disclosure in the proposal form.
Ratio Decidendi: The commission emphasized that failure to disclose significant health issues constituted a breach of the principle of utmost good faith, but also recognized the need to adjust for the refunded premium previously accepted.
Result: The appeal was allowed in part, modifying the award to account for the already refunded amount.
| Table of Content |
|---|
| 1. claims must not suppress material health facts. (Para 2 , 3) |
| 2. refunding premiums impacts awarded claims. (Para 5 , 10 , 12) |
| 3. good faith is essential in insurance contracts. (Para 6 , 8 , 11) |
| 4. final ruling adjusted for prior refunds. (Para 13) |
Order : (HON’BLE SMT. MEENA RAMANATHAN, I/c PRESIDENT)
1. This appeal is filed by the Appellant/Opposite Party u/s. 41 of the Consumer Protection Act, 2019 , praying this Commission to set aside the order dated 02.07.2021 in CC 72/2019 passed by the District Consumer Commission, Nalgonda and consequently allow the appeal and pass such other order or orders as this Commission deems fit and proper in the circumstances of the case in the interest of justice.
2. The brief averments of the complaint are that the complainant is the wife and nominee of deceased D.Krishnaiah, who obtained SBI Life Smart Wealth Builder on 31.12.2017 from the opposite party vide UIN: 111L095VO1, Policy No. 1K731437508, by paying 1st premium on the same day. They issued 100 equity fund value, number of units is 1174.619000 and assured death benefit of Rs.4,00,000/-. The complainant’s husband died on 27.05.2019 and the same was informed to the opposite party by submitting the claim form and relevant documents for settlement of death benefit. After query, opposite party on 10.09.2019 transferred Rs.80,000/- towards refund of the two premiums amount, but have repudiated the claim of the complainant on the ground of suppression of material facts. The complainant submits that there is no suppression of material fact. The opposite party acted in a negligent manner and failed to settle the issue whereby, the complainant suffered mental agony and financially. Due to the acts committed by the opposite party, the complainant suffered irreparable loss and she could not receive the death benefit of her husband. Hence, the complaint.
3. The opposite party filed their counter stating that the complainant’s husband during his life time, had submitted the proposal form bearing No. 1KAQ91080 on 17.12.2017 for a sum assured of Rs.4,00,000/ while submitting the said Form, he replied in negative to Question No. 13(iv); 13(xv) and 13(xviii), regarding his health issues. The opposite party emphatically denies all that is contained in the complaint which is contrary to or inconsistent with what is stated by the opposite party. On the basis of the information furnished in the proposal form and relying on the information and beliving the same to be true and accurate, the proposal form was accepted in utmost good faith. The policy was issued for a basic sum assured of Rs.4,00,000/- with annual premium of Rs.40,000/- for a premium of paying term of 05 years and term of 10 years. The complainant’s husband reported to have died on 27.05.2019 and the policy resulted in a claim in just 01 year 04 months and 27 days. During the claim assessment, it was revealed that the DLA was suffering from “Ataxia with tremors & that he was chronic alcoholic” prior to the date of signing of proposal form. The claim under the policy was repudiated as per the terms and conditions of the policy and the premium amount of Rs.80,000/- paid under the policy was refunded to the complainant’s account on 10.09.2019. The claim was repudiated as it was found that the DLA availed the insurance cover fraudulently by suppressing the material facts which is not as per the terms and conditions of the policy. It is further stated that u/s 45 of the Insurance (Amendment) Act, 1938 wherein, in case of fraud, the onus of disproving lies upon the beneficiaries, in case the policy holder is not alive. There is no gross negligence committed by the opposite party and there is no deficiency of service on the part of opposite party. With this, requested to dismiss the complaint with costs.
4. Before the Commission below, complainant filed proof affidavit as PW1 and marked Ex. A1 to A5. The opposite party filed their proof affidavit and marked Ex.B1 to B5.
5. The District
