Case Note & Summary
The present appeal arises from an order dated 28.05.2019 of the National Consumer Disputes Redressal Commission, New Delhi, dismissing the appellant's appeal against the order of the State Commission, Rajasthan, Jaipur, which had rejected the appellant's claim on the ground of suppression of material facts. The appellant's father, Ramkaran Sharma, had obtained a life insurance policy from the respondent, Exide Life Insurance Co. Ltd., on 09.06.2014. He died in an accident on 19.08.2015. The appellant, as the nominee, submitted a claim, which was repudiated by the respondent on 03.03.2016 on the ground that the deceased had suppressed material facts while applying for the policy. Specifically, the proposal form required disclosure of existing insurance policies. The deceased disclosed only one policy from Aviva Life Insurance but failed to disclose three other policies from the Life Insurance Corporation of India that were in force at the time. The State Commission dismissed the complaint, and the National Commission upheld that decision, relying on the Supreme Court's judgments in Reliance Life Insurance Co. Ltd. & Anr. v. Rekhaben Nareshbhai Rathod and Satwant Kaur Sandhu v. New India Assurance Co. Ltd. The appellant argued that the omission was inadvertent, that the agent filled the form, and that the death was accidental, not due to illness. The respondent contended that the suppression was material and justified repudiation, citing Manmohan Nanda v. United India Assurance Company Limited & Another. The Supreme Court examined the terms of the policy, particularly clauses 51 to 55, which required disclosure of existing insurance covers. The court noted that the deceased had four policies in force but disclosed only one. The court held that the non-disclosure was a suppression of material facts, as the insurer's decision to accept the risk and the premium would be influenced by the total insurance cover. The court dismissed the appeal, affirming the orders of the State Commission and National Commission.
Headnote
A) Insurance Law - Suppression of Material Facts - Life Insurance Policy - Non-disclosure of existing policies - The insured had taken four policies (one from Aviva and three from LIC) but disclosed only the Aviva policy in the proposal form. The court held that this constituted suppression of material facts, as the insurer's decision to accept the risk was influenced by the total insurance cover. The claim was rightly repudiated under the terms of the policy and Section 45 of the Insurance Act, 1938. (Paras 7-9) B) Insurance Law - Duty of Disclosure - Uberrimae Fidei - The contract of insurance is based on utmost good faith. The insured must disclose all material facts within his knowledge. Failure to do so, even if inadvertent, entitles the insurer to avoid the contract. The court relied on Reliance Life Insurance Co. Ltd. & Anr. v. Rekhaben Nareshbhai Rathod, (2019) 6 SCC 175 and Satwant Kaur Sandhu v. New India Assurance Co. Ltd., (2009) 8 SCC 316. (Paras 4, 9) C) Insurance Law - Repudiation of Claim - Validity - The repudiation was upheld by the State Commission and National Commission. The Supreme Court dismissed the appeal, affirming that the suppression was material and the insurer was justified in repudiating the claim. (Paras 2, 9)
Issue of Consideration
Whether the non-disclosure of existing life insurance policies by the insured at the time of obtaining a new policy amounts to suppression of material facts, justifying repudiation of the claim by the insurer.
Final Decision
The Supreme Court dismissed the appeal, affirming the orders of the State Commission and National Commission, holding that the repudiation of the claim was justified due to suppression of material facts.
Law Points
- Suppression of material facts
- Insurance contract
- Uberrimae fidei
- Repudiation of claim
- Life insurance policy
- Non-disclosure of existing policies
