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2025 Supreme(Online)(SCDRC) 33581
STATE CONSUMER DISPUTES REDRESSAL COMMISSION
Padma Pandey, Presiding Member, Rajesh K. Arya, Member
SBI Life Insurance Company Ltd. – Appellant
Versus
Sujata Kakkar – Respondent
Appeal No. : 103 of 2025
For the Appellants/Petitioners: Rajneesh Malhotra
For the Respondents: Parminder Singh, Sanjeev Dua
An insurer cannot repudiate a claim on grounds of non-disclosure of pre-existing health conditions if it failed to conduct a medical examination before issuing the policy, and the insurer bears the burden of proving that the insured had conscious knowledge of the alleged diseases at the time of proposal.
Headnote:(A) Consumer Protection - Insurance - Repudiation of claim - Allegation of suppression of material facts - Insurer issued policy without conducting medical examination despite applicant being over 45 years - Held, insurer cannot subsequently decline claim citing pre-existing disease when it knowingly bypassed mandatory medical assessment - Doctrine of utmost good faith - Failure to prove conscious knowledge of ailment by insured - Repudiation based solely on unverified medical papers without examination of treating doctors amounts to deficiency in service. (Paras 12, 13, 14, 16)
Facts of the case:
The husband of the respondent obtained a housing loan and an associated life insurance policy. Shortly after the insured's death due to cardiac arrest, the insurer repudiated the claim alleging suppression of material medical facts regarding pre-existing conditions. The consumer complaint filed by the widow was allowed by the District Commission, directing the insurer to pay the sum assured along with interest. The insurer challenged this order in the present appeal.
Findings of Court:
The Commission observed that the insurer failed to produce legally admissible evidence, such as affidavits from treating doctors, to substantiate claims of pre-existing disease or willful concealment. It categorized the insurer's conduct of issuing policies without medical checks and then selectively scrutinizing post-claim medical records as a deficiency in service and unfair trade practice.
Issues: Whether the insurer is justified in repudiating a death claim on the grounds of suppression of material facts when no medical examination was conducted prior to policy issuance.
Ratio Decidendi: An insurer cannot invoke the doctrine of utmost good faith to repudiate a claim for non-disclosure if it intentionally chose to bypass medical assessment of the proposer. Furthermore, alleged medical history documents must be proven through admissible evidence; mere existence of past records is insufficient without proving the insured's conscious knowledge of such conditions at the time of the proposal.
Result: Appeal dismissed.
PER RAJESH K. ARYA, MEMBER
The instant appeal has been filed by opposite parties No.3 & 4 – SBI Life Insurance Company Limited (appellants herein) for setting aside order dated 20.12.2024 passed by District Consumer Disputes Redressal Commission-II, U.T., Chandigarh (hereinafter to be referred as ‘District Commission’) vide which, Consumer Complaint bearing No.168 of 2020 filed by the complainant – Mrs. Sujata Kakkar (respondent No.1 herein) has been partly allowed against the appellants (opposite parties No.3 & 4) by granting following relief:-
“13] In view of the above discussion, it can be safely concluded that the act of OP No.3 & 4/Insurer in repudiating the genuine claim of the complainant is not only wrong and arbitrary but also certainly amounts to deficiency in service as well as unfair trade practice. The complaint of the complainant is partly allowed. OP No.3 & 4 are directed to pay the sum assured Rs.15,50,000/- to the complainant along with interest @ 6% per annum from the date of repudiation of the claim i.e. 31.07.2019 till the date of its actual realization.
14] The complaint qua OP No.1 & 2 stands dismissed.
15] The above said order shall be complied with by the OP No.3 & 4 within a period of 45 days from the date of receipt of certified copy of this order.”
2] In brief, the case of the complainant before the District Commission was that her husband Late Sh. Rajinder Puri was working in the office of the Accountant General (A&E) Punjab and had taken a house loan of Rs.15,50,000/- from opposite party No.1. In order to secure the House Loan, opposite party No.1 insisted for Life Insurance Cover and recommended opposite party No.3 to do the job of insuring the complainant’s husband. Opposite party No.3 issued a SBI Life RiNn Raksha Insurance Policy and Membership Form for a period from 11.08.2017 to 11.08.2027, which was filled up on 15.06.2017 for an insured amount of Rs.15,50,000/- after taking a premium of Rs.9,244/- in which the complainant is the nominee. The policy was issued without medical examination and without any terms & conditions, which were never told to the complainant’s husband. The husband of the complainant died on 02.06.2019 due to Cardiac Arrest. The complainant raised the claim by filing claim form (Annexure C-4) as well as medical attendant certificate (Annexure C-5) of Govt. Multi Speciality Hospital, Sector 16, Chandigarh alongwith all the relevant documents. The complainant also showed her difficulty in making the payment of installments of house loan due to her husband’s death. Since opposite party No.1 insisted the complainant to pay the loan installments, she approached the officials of opposite party Insurance Company to speed up the matter for settlement. To the utter surprise of the complainant, opposite party No.3 repudiated the genuine death claim of complainant’s husband on 31.07.2019) on the grounds of suppression of material facts i.e. husband of complainant at the time of taking the policy gave wrong information regarding his health and the medical record shows otherwise. The complainant visited the office of opposite party No.3 and tried to convince that whatever was stated in the proposal form was correct, nowhere the complainant’s husband given a false information, the question No.5(i) and 5(iii) of proposal form were replied correctly as neither the complainant’s husband suffered from those diseases nor taken any treatment qua those diseases and complainant was very active, living healthy life. Therefore, the question of not disclosing the material facts does not arise but opposite party No.3 did not review the rejection of claim. Alleging aforesaid acts amounting to deficiency in service and unfair trade practice on the part of the opposite parties, the complainant filed a consumer complaint before the District Commission seeking direction to the opposite parties to pay the sum assured of Rs.15,50,000/- along with interest, compensation for mental agony & harassment and
