Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(SCDRC) 2255

STATE CONSUMER DISPUTES REDRESSAL COMMISSION
G. Radha, President, Meena Ramanathan, Member
Life Insurance Corporation Of India – Appellant
Versus
M. Prasanna Laxmi – Respondent
FA.NO.569 OF 2022

Advocates:
For the Appellants/Petitioners: Ramakrishna Varada, Hrishikesh Ganu
For the Respondents: KNS Sampath Kumar

An insurance claim cannot be repudiated on the ground of non-disclosure of pre-existing health conditions unless the insurer proves that the suppressed facts were material to the risk and had a direct nexus or causal connection with the cause of death.

Headnote:(A) Consumer Protection - Insurance - Repudiation of claim - Non-disclosure of pre-existing disease - Deceased policyholder died of heart attack - Insurer repudiated claim citing suppression of duodenal ulcer and gastritis - Held, mere non-disclosure of minor or unrelated ailments does not justify repudiation unless material to the risk or having a nexus with the cause of death - Burden of proof lies on the insurer to establish nexus. (Paras 10, 11, 12)

Facts of the case:
The deceased husband of the respondent obtained a life insurance policy and passed away within eight months due to a heart attack. The appellant insurance company rejected the claim on the ground of suppression of material facts, specifically that the deceased suffered from chronic duodenal ulcer and gastritis at the time of proposal but failed to disclose it. The District Commission allowed the complaint, leading to this appeal.

Findings of Court:
The court held that the appellant failed to prove that the non-disclosed ailments (duodenal ulcer/gastritis) had any nexus with the cause of death (heart stroke) or that they were of a nature that would have influenced the insurer's decision to issue the policy. Repudiation on mere suspicion without evidence of materiality was termed as deficiency of service.

Issues: Whether the non-disclosure of past medical treatment for gastro-intestinal issues by the deceased constituted suppression of a material fact justifying the repudiation of the insurance death claim.

Ratio Decidendi: In a contract of insurance, non-disclosure must relate to a material fact that influences the risk assessment. Minor or unrelated ailments do not justify repudiation when there is no causal connection between the suppressed condition and the actual cause of death.

Result: Appeal dismissed.

Table of Content
1. overview of the dispute regarding life insurance death benefit repudiation. (Para 1 , 2 , 3 , 4)
2. procedural history and the grounds for the current appeal. (Para 5 , 6 , 7 , 8)
3. legal necessity of establishing a nexus between suppressed facts and the cause of death for valid repudiation. (Para 9 , 10 , 11 , 12)
4. final order dismissing the appeal and confirming deficiency of service. (Para 13)

******

Order: (Per Smt.Dr.G.Radha Radha, Hon’ble President)

1. This appeal is preferred by the Opposite Party aggrieved by the orders dated 27.04.2022 in CC.No.20/2021 passed by the District Consumer Disputes Redressal Commission, Khammam.

2. For the sake of convenience, the parties are hereinafter referred as arrayed before the District Commission as Complainant and Opposite Party.

3. The case of the Complainant was that, the Complainant was the wife of the deceased M.Srinivasa Chary. The deceased M.Srinivasa Chary had obtained a policy certificate premium endowment plan from Opposite Party to cover the death benefits for Rs.4,00,000/- by way of paying quarterly premium of Rs.8,690/- vide policy No.699154222 valid from 06.02.2018. On 12.02.2019, suddenly the deceased M.Srinivasa Chary sustained heart stroke and was shifted to Srinivasa Nursing Home, Bhadrachalam and while undergoing treatment, died on the same day. The Complainant filed an application before the Opposite Party by submitting the original policy and death certificate for grant of Rs.4,00,000/- under death benefits. The Complainant made several rounds to the office of the Opposite Party, but the Opposite Party did not pay the death benefit. Finally on 30.11.2019, the Opposite Party sent a letter to the applicant repudiating the liability stating that at the time of taking the policy, he was suffering with gastric trouble and by suppressing the said fact, he obtained the policy. The Complainant contended that the deceased died due to heart attack. Gastric problem was not such a disease which could lead to his death. Only to escape from the liability, the Opposite Party created the false allegation. The Opposite Party already settled two claims of the deceased after his death vide policy bearing No.688489796 and 689484905 for an amount of Rs.1,00,000/- and Rs.1,27,400/- respectively. Vexed with the attitude of the Opposite Party, the Complainant filed the Consumer Complaint alleging deficiency of service of Opposite Party claiming Rs.4,00,000/- towards death benefit under policy No.699154222 and to pay damages of Rs.50,000/- for deficiency of service.

(a) The Opposite Party filed written version admitting obtaining the insurance policy by the deceased for a sum assured of Rs.4,00,000/- on 30.06.2018 (date of commencement of risk) during his lifetime and that he nominated his wife (the Complainant) as the nominee under the policy. The mode of payment of premium was quarterly for Rs.8,690/-. They denied the other averments made against the Opposite Party except the settlement of death claim under two other policies of the deceased life assured and contended that under the above policies, the duration of commencement of policies was more than three years and hence, the same were treated as non-early claims and were settled by their Bhadrachalam branch office. But in the present case, the policy duration was only 7 months and 12 days i.e., from 30.06.2018 to 12.02.2019 (date of commencement of risk to date of death). As such the claim under this policy was treated as early claim and as per claims rules, the claims process was initiated. During the said claim process, it transpired that the said life assured had taken medical treatment for Duodenal Ulcer since 2016. The treatment reports from Care Hospital, Hyderabad, Endoscopy Report dated 10.07.2017 revealed that the said life assured was suffering from Chronic Duodenal Ulcer and was under medical treatment for the same. The proposer/life assured had intentionally suppressed the material fact of his pre-

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2026 Supreme(Online)(SCDRC) 2255

STATE CONSUMER DISPUTES REDRESSAL COMMISSIONG. Radha, President, Meena Ramanathan, MemberLife Insurance Corporation Of India – AppellantVersusM. Prasanna Laxmi – RespondentFA.NO.569 OF 2022

An insurance claim cannot be repudiated on the ground of non-disclosure of pre-existing health conditions unless the insurer proves that the suppressed facts were material to the risk and had a direct nexus or causal connection with the cause of death.

STATE CONSUMER DISPUTES REDRESSAL COMMISSION
G. Radha, President, Meena Ramanathan, Member
Life Insurance Corporation Of India – Appellant
Versus
M. Prasanna Laxmi – Respondent
FA.NO.569 OF 2022