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2026 Supreme(Online)(SCDRC) 4393
STATE CONSUMER DISPUTES REDRESSAL COMMISSION
A. C. Raval, Presiding Member, P. R. Shah, Member
Taraben Babubhai Chamar – Appellant
Versus
PNB Met Life Insurance Company Ltd. – Respondent
APPEAL NO. 598 OF 2023
For the Appellants/Petitioners: P. V. Patel
For the Respondents: A. D. Solanki
An insurer must substantively prove grounds for repudiation by communicating specific materials to the insured. Reliance on vague allegations of non-compliance to treat a policy as void ab initio, without disclosing investigation findings or evidence, constitutes a violation of mandatory statutory requirements and principles of natural justice.
Headnote:(A) Insurance Act, 1938 - Section 45 - Life Insurance - Repudiation of claim - Mandatory obligation of insurer - Insurer required to communicate in writing specific grounds and materials for repudiation - Failure to disclose specific findings of investigation renders cancellation arbitrary and legally unsustainable. (Paras 9.23, 9.24)
(B) Evidence - Burden of proof - Initial burden lies on the party asserting a fact - Mere invocation of statutory power without producing supporting evidence or investigation reports fails to discharge the evidentiary burden - Adverse inference must be drawn against an insurer for withholding critical investigative material. (Paras 9.4, 9.7)
(C) Natural Justice - Principles of - Requirement of fair opportunity - Issuing notice demanding documents under cover of a presumptive admission of findings, especially during restrictive periods, without identifying specific discrepancies, violates fundamental principles of natural justice and precludes meaningful response. (Paras 9.17, 9.18)
Facts of the case:
The complainant, as a nominee, sought death benefits under a life insurance policy following the death of the insured. The insurer rejected the claim and cancelled the policy ab initio, alleging non-disclosure and suppression of material facts discovered during a post-issuance investigation. The insurer claimed a warning letter seeking documents was sent, non-compliance with which was treated as an admission of the investigation findings. The initial commission dismissed the complaint, which led to the present appeal.
Findings of Court:
The court held that the insurer failed to produce any evidence, including the alleged investigation report, to substantiate the claimed discrepancies. The court noted that the insurer’s act of issuing a cancellation notice mere days after the death claim, without providing specific details or allowing a genuine opportunity for response, showed a pre-determined intent to avoid liability rather than a transparent verification process.
Issues: The main issues were the validity of the policy cancellation procedure under the governing statute, the adequacy of the insurer's disclosure of grounds for repudiation, and whether the non-compliance with a document request can be unilaterally construed as an admission of fraud or misstatement.
Ratio Decidendi: The insurer is statutorily mandated to provide specific grounds and materials for repudiation. Failure to disclose specific discrepancies, coupled with the absence of evidentiary support for claims of suppression, renders the cancellation of a policy arbitrary and a deficiency in service, as an insurer cannot substitute unilateral assumptions for proven facts.
Result: Appeal allowed.
| Table of Content |
|---|
| 1. establishing the factual background and procedural history of the insurance dispute. (Para 1 , 2 , 3 , 5) |
| 2. parties' contentions regarding the legitimacy of policy cancellation and document submission. (Para 4 , 6 , 7) |
| 3. insurer must prove grounds for cancellation under section 45 with evidence. (Para 8 , 9) |
| 4. conclusion of appeal with order for claim payment and compensation. (Para 10) |
ORDER BY MS. P.R. SHAH, MEMBER
1. The present Appeal is filed by the Appellant being aggrieved and dissatisfied with the order dated 27.03.2023 passed by the Ld. District Consumer Dispute Redressal Commission, Sabarkantha at Himmatnagar in Consumer Dispute Case No. 448 of 2022.
2. When the matter was called out Ld. Advocate Mr. P. V. Patel for the Appellant and Ld. Advocate Mr. A. D. Solanki for the Respondent remained present.
3. The Appellant is the Original Complainant, Respondent is the Original Opponent in the Complaint before the Ld. District Commission and for the sake of convenience parties will be addressed with the same nomenclature.
4. Impugned Judgment
4.1. The Learned District Commission observed that the Opponent had cancelled the insurance policy by invoking Section 45 of the Insurance Act on the ground that the insured failed to furnish adequate and requisite information as sought by the Opponent. The Commission further held that in such circumstances, the Opponent is not obligated to establish any additional grounds for repudiation, as the burden squarely lies upon the insured under the said provision.
4.2. The Learned District Commission recorded a finding that, in the present case, the Complainant failed to comply with the repeated requisitions made by the Opponent for submission of relevant documents and concluded that the Complainant had misled the Commission and had instituted a false and untenable complaint. On these findings, the complaint came to be dismissed.
5. Facts
5.1. The brief facts, as narrated in the complaint, are that the husband of the Complainant, (hereinafter DLA) had obtained an insurance policy titled "PNB MetLife Endowment Savings Plan Plus" from the Opponents. The said policy commenced on 24/2/2021 and was scheduled to mature on 20/2/2041, with an annual premium of Rs. 35,337.72. The Complainant is the nominee under the said policy, which provided a sum assured of Rs. 6,00,000/-.
5.2. It is the case of the Complainant that the DLA expired on 14/8/2021 due to a heart attack during the subsistence of the policy. Thereafter, the Complainant submitted a death claim form on 18/11/2021, seeking the policy benefits. The said claim form was received and duly acknowledged by the Opponent's Gandhinagar office on 18/11/2021. However, the Opponent, vide its letter dated 24/11/2021, cancelled the policy on the grounds of alleged non-submission of requisite documents and alleged discrepancies noted in the information and documents submitted along with the proposal form.
5.3. Aggrieved by the cancellation of the policy and the consequent repudiation of the death claim, the Complainant alleged deficiency in service and unfair trade practice on the part of the Opponents and consequently filed the present complaint before the Learned District Commission
6. Arguments of the Complainant
6.1. The Learned Advocate for the Complainant, Mr. P.V. Patel, submits that the order passed by the Learned District Commission is contrary to the facts on record, unjust, and legally unsustainable, and therefore deserves to be quashed and set aside.
6.2. It is contended that the Learned District Commission has erred in law by framing and deciding issues which were neither raised by the Opponent nor borne out from the pleadings and evidence on record. Such an approach, according to the Complainant, is impermissible in law and has resulted in a grave miscarriage of justice.
6.3. The Complainant submits that the death claim was duly lodged on 18/11/2021 and was received by the Opponent on the same date. It is specifically d
