The State Consumer Disputes Redressal Commission, Uttarakhand clarified that insurers cannot repudiate life insurance claims solely on grounds of alleged age or occupation misstatement in proposal forms when the policy contains a specific contractual mechanism for adjusting such discrepancies and the life assured remains eligible for coverage under the policy terms. The judgment emphasizes that materiality of misstatements must be assessed against the policy's own provisions, not general principles of utmost good faith.
Background & Facts
The Dispute
The dispute arose from the repudiation of an insurance claim by SBI Life Insurance Co. Ltd. (appellant/opposite party No. 1) on the ground that the life assured, Smt. Sumitra Devi (DLA), had furnished incorrect particulars regarding her age, date of birth, and occupation in the proposal form for the 'Smart Elite Plan Gold Cover' policy.
Key Facts
- The DLA obtained insurance policy No. 53003047202 UNI 111207202 from appellant through its agent Sh. Mukesh Kothari (respondent No. 2) on 20.03.2014
- Annual premium was Rs. 1,50,000/-; two installments totaling Rs. 3,00,000/- were paid
- Policy provided Rs. 10 Lakhs cover for normal death and Rs. 20 Lakhs for accidental death
- DLA died on 15.04.2015 during policy currency due to natural death
- Respondent No. 1 (nominee) lodged insurance claim which was repudiated by appellant vide letter dated 22.10.2015
- Appellant subsequently refunded Rs. 3,00,000/- as premium amount to respondent No. 1 on humanitarian ground
- Policy documents specified minimum entry age as 18 years last birthday and maximum as 60 years last birthday
- Clause 16.9 of policy document specifically addresses misstatement of age with adjustment mechanisms
- Proposal form showed DLA's age as 16.05.1960; respondent No. 1 relied on Aadhar Card showing date of birth as 20.01.1955
- Proposal form showed DLA's occupation as attendant at primary health centre; this was subsequently denied
Procedural History
- Date of Admission: 14.07.2017 (complaint filed before District Commission)
- Date of Final Hearing: 21.09.2026
- Date of Pronouncement: 06.10.2026
- District Commission Order: Judgment and order dated 16.06.2017 allowing complaint and directing payment of Rs. 7 Lakhs with interest, Rs. 1,000/- for mental agony, and Rs. 1,000/- as litigation charges
- Notice to Opposite Party No. 2: Issued by registered post on 06.06.2016; not received back undelivered
- Ex Parte Proceedings: Vide order dated 23.08.2016, complaint proceeded ex parte against opposite party No. 2 due to non-appearance
- Present Appeal: Filed by appellant challenging District Commission's judgment dated 16.06.2017
Relief Sought
Appellant sought reversal of District Commission's order dated 16.06.2017, contending that the Commission erred in holding no suppression of material fact by DLA, failed to appreciate utmost good faith, ignored discrepancies in DLA's particulars, and wrongly rejected territorial jurisdiction plea.
The Legal Issue
The central question was whether the alleged misstatement of age and occupation of the life assured in the proposal form constituted a material fact justifying repudiation of the entire insurance claim when the policy contained a specific contractual clause (Clause 16.9) for addressing age misstatement and the life assured remained eligible for coverage under the policy's maximum entry age limit.
Arguments Presented
For the Appellant
Appellant contended that the District Commission erred in:
- Holding that there was no suppression of material fact by DLA regarding age, date of birth, and occupation
- Failing to appreciate the plea of utmost good faith applicable to insurance contracts
- Ignoring discrepancies where proposal form showed age as 16.05.1960 while respondent relied on Aadhar Card showing 20.01.1955
- Disregarding that occupation shown as attendant at primary health centre was subsequently denied
- Erring in holding DLA was not responsible for proposal form contents merely because filled by agent
- Failing to appreciate documentary evidence and judgments relied upon by appellant
- Wrongly rejecting plea regarding territorial jurisdiction Appellant relied on judgments of Supreme Court in Reliance Life Insurance Co. Ltd. & Anr. vs. Rekhaben Nareshbhai Rathod (2019) and Satwant Kaur Sandhu vs. New India Assurance Company Ltd. (Civil Appeal No. 2776 of 2002), and NCDRC judgments in Megharam Bidiasar vs. Branch Manager, LIC & Anr. (Revision Petition No. 3605 of 2017) and Gulab Singh vs. HDFC Standard Life Insurance Co. Ltd. & Anr. (Revision Petition No. 3142 of 2018) to argue that misrepresentation of material facts justified repudiation.
For the Respondent
Respondent No. 1 argued that:
- The District Commission's judgment was based on facts, evidence, and material on record
- No question of interference arose as the Commission properly appreciated the evidence
- The alleged misstatement of age did not render DLA ineligible for policy as her age on date of commencement (20.03.2014) was 59 years (within 60 years max entry age)
- Clause 16.9 specifically provides mechanism for dealing with age misstatement where life assured remains eligible
- Appellant failed to establish by cogent evidence that discrepancy in occupation was material or substantially affected risk undertaken by insurer
- The impugned judgment and order should be upheld as it correctly applied law to facts
The Court's Analysis
The Commission first noted that it is not in dispute that DLA obtained the policy on 20.03.2014 and that proposal form mentioned her age as 16.05.1960, while respondent relied on Aadhar Card showing date of birth as 20.01.1955. It further noted that DLA showed occupation as attendant at primary health centre in proposal form, which was subsequently denied.
Examining Clause 16.9 of the policy document, the Commission observed that it specifically deals with misstatement of age and prescribes consequences. The clause requires insurer to first check eligibility for basic life cover and accident benefit as on date of commencement of policy. The Commission found that even if the correct age (25.01.1955) was accepted, DLA was 59 years of age on 20.03.2014 (date of commencement), i.e., within the maximum entry age of 60 years last birthday prescribed under the policy. Therefore, DLA remained eligible for the insurance cover, and the case fell under Clause 16.9.1 ("If eligible") and not under 16.9.2 ("If not eligible") as relied upon by the appellant in the repudiation letter.
Regarding occupation, the Commission held that appellant failed to establish from the material on record that the alleged discrepancy in occupation rendered DLA ineligible for the policy or materially altered the risk so as to justify repudiation of the entire claim. The Commission further found that Clause 16.7 of the policy document (relating to non-disclosure or misstatement) was not attracted as the alleged non-disclosure or misstatement had not been established to be material to the insurance contract or to have materially affected the risk undertaken by the insurer.
The Commission distinguished the Supreme Court judgments relied upon by appellant, noting that in those cases, the assured was either ineligible for the policy or no specific contractual mechanism existed for addressing misstatements. In the present case, the policy itself contained Clause 16.9 providing for adjustment of mortality charges where life assured otherwise remains eligible. The Commission concluded that appellant failed to prove that the alleged misstatement regarding age and occupation constituted material facts justifying repudiation of the insurance claim.
The Verdict
The appeal is dismissed. The impugned judgment and order dated 16.06.2017 passed by the District Commission, Tehri Garhwal shall stand modified to read as under: (i) The sum assured shall be treated as Rs. 10,50,000/- in place of Rs. 10,00,000/-. (ii) After giving credit for Rs. 3,00,000/- already paid, the appellant - Insurance Company shall pay Rs. 7,50,000/-. (iii) The aforesaid amount Rs. 7,50,000/- shall carry interest @ 6% per annum from the date of institution of complaint till the date of actual payment. (iv) No separate amount shall be payable towards mental agony. (v) The aforesaid amount shall be payable by the appellant - Insurance Company alone. All other directions of the learned District Commission shall remain same.
What This Means For Similar Cases
Insurance Contracts Govern Misstatement Consequences
Where an insurance policy contains a specific contractual clause addressing misstatements (like Clause 16.9 here), insurers must first resort to that mechanism rather than seeking outright repudiation of the claim. The existence of such clauses limits the insurer's remedies to adjustment of charges or policy continuation, not automatic avoidance.
Materiality Assessed Against Policy Terms
The materiality of alleged misstatements in proposal forms must be evaluated against the policy's own eligibility criteria and provisions, not general principles of utmost good faith. If the life assured remains eligible for coverage under the policy terms despite the misstatement, repudiation of the entire claim is unjustified.
Occupation Discrequires Proof of Material Risk Alteration
Alleged discrepancies in occupation stated in proposal forms do not automatically justify claim repudiation. Insurers must establish by cogent evidence that such discrepancies materially altered the risk undertaken or affected eligibility under the policy's terms. Mere denial of the stated occupation without proof of material impact is insufficient.
Eligibility Determination Based on Policy Commencement Date
For age misstatements, eligibility must be assessed as of the date of commencement of the policy, not at any other time. If the correct age falls within the policy's prescribed entry age limits on that date, the life assured remains eligible, triggering adjustment clauses rather than repudiation provisions.
