The National Consumer Disputes Redressal Commission dismissed a revision petition by Life Insurance Corporation of India challenging the repudiation of a Jeevan Anand policy on alleged non-disclosure of the deceased’s cardiac condition. The Commission held that the date of policy issuance, not the retrospective risk commencement date, governs the insured’s duty to disclose material facts. Consequently, the findings of the District Forum and State Commission affirming the claim were upheld.
Background & Facts
The Dispute
Life Insurance Corporation of India (LIC) repudiated the claim under Jeevan Anand Policy No. 114529122 for a sum assured of Rs.5,00,000 on the ground of alleged fraudulent suppression of material facts relating to the health of the deceased life assured (DLA), Navitesh Sadhwani. The respondent, Prakash Sadhwani, as nominee, approached the District Consumer Forum which allowed the complaint and directed LIC to pay the sum assured with interest at 9% per annum from the date of repudiation till actual payment, additionally awarding Rs.1,00,000 towards deficiency in service and harassment and Rs.50,000 towards litigation expenses. The State Consumer Disputes Redressal Commission affirmed the District Forum’s order.
Key Facts
- The proposal form was completed and signed on 31.01.2007.
- The first premium cheque was handed over to the authorised agent/panel medical examiner on 31.01.2007.
- Medical examination of the DLA was conducted on the same day, 31.01.2007.
- Counter Receipt No.1375523 dated 07.02.2007, generated at 14:52 hours, indicates receipt of the proposal and premium at the Branch Office under the Green Channel scheme.
- The policy bond was issued on 20.02.2007, recording the proposal date as 31.01.2007 and the commencement of risk retrospectively from 28.01.2007.
- The DLA was hospitalised on 03.10.2008 and expired on 14.10.2008 at Indraprastha Apollo Hospital, Delhi, due to hypertrophic cardiomyopathy, congestive heart failure and cardiorespiratory arrest.
- The respondent intimated LIC of the death vide letter dated 05.11.2008 and submitted the claim documents.
- The claim under the earlier policy (No. 114742821) was investigated and settled.
- The claim under the subject policy was repudiated on the ground of alleged fraudulent suppression of material facts relating to the health of the DLA.
- Dr. S. Lahiri, Consultant Cardiologist, issued a certificate dated 18.12.2008 stating that the DLA was diagnosed with hypertrophic cardiomyopathy by 2D echocardiography on 05.02.2007, with no prior history of disease.
- LIC contended that the DLA was aware of the cardiac condition before the proposal was submitted on 07.02.2007 but gave negative replies in the proposal form regarding medical consultation, hospitalisation and heart disease.
- The respondent contended that the proposal form and first premium were handed over on 31.01.2007, the subsequent inwarding on 07.02.2007 was an internal administrative matter, and the medical examination on 31.01.2007 recorded no disease.
Procedural History
- 26.11.2012: Ld. District Consumer Disputes Redressal Forum, New Delhi, in Complaint Case No. CC/1396/2009, allowed the complaint and directed LIC to pay the sum assured Rs.5,00,000 with interest at 9% per annum from the date of repudiation till actual payment, plus Rs.1,00,000 towards deficiency in service and harassment and Rs.50,000 towards litigation expenses.
- 29.07.2021: Ld. State Consumer Disputes Redressal Commission, Delhi, in First Appeal No. 05/2013, affirmed the District Forum’s order with a stipulation regarding enhancement of interest in the event of non-compliance within the prescribed period.
- NC/RP/1154/2021: Revision Petition filed before the National Consumer Disputes Redressal Commission challenging the State Commission’s order.
- NC/IA/10597/2021 and NC/IA/10596/2021: Interlocutory applications for exemption of filing typed copies and for stay, respectively.
- 01.10.2026: Judgment of the National Consumer Disputes Redressal Commission dismissing the revision petition.
Relief Sought
The petitioner sought to set aside the impugned order dated 29.07.2021 of the State Commission and to have the respondent’s claim dismissed, thereby avoiding liability to pay the sum assured, interest, compensation and costs.
The Legal Issue
The central question was whether the Petitioner established that the deceased life assured (DLA), at the relevant time, had knowledge of his cardiac condition and deliberately suppressed it to obtain the policy by misrepresentation. Specifically, whether the fact allegedly suppressed (the cardiac condition) was within the knowledge of the DLA at the relevant point of time and whether the evidence on record establishes a conscious failure to disclose the same. Additionally, whether the date of issuance of the policy or the retrospective commencement date is relevant for determining the insured’s duty of disclosure under the doctrine of utmost good faith.
Arguments Presented
For the Appellant/Petitioner
LIC argued that the proposal form was actually submitted and inwards at the Branch Office only on 07.02.2007 under the Green Channel scheme, relying on Counter Receipt No.1375523 dated 07.02.2007. It contended that the DLA had been diagnosed with hypertrophic cardiomyopathy on 05.02.2007 per the certificate of Dr. S. Lahiri dated 18.12.2008, and that the DLA knowingly gave false answers in the proposal form regarding medical consultation, hospitalisation and heart disease. LIC asserted that the duty of utmost good faith (uberrima fides) continues until the contract of insurance is concluded, citing Satwant Kaur Sandhu v. New India Assurance Co. Ltd. (2009) 8 SCC 316, LIC v. Asha Goel (2001) 2 SCC 160, and LIC v. Raja Vasireddy Komalavalli Kamba (1984) 2 SCC 719. Furthermore, LIC relied on Reliance Life Insurance Company Ltd. v. Jaya Wadhwani & Branch Manager, Reliance Life Insurance Company Ltd., v. Usha Soni (2024) 2 SCC 427 to argue that the date of issuance of the policy is the relevant date and that a retrospective commencement of risk cannot by itself be treated as the date on which the policy was issued, noting that the policy was admittedly issued on 20.02.2007.
For the Respondent/State
The respondent argued that the proposal form and the first premium cheque were handed over to the authorised agent/panel medical examiner on 31.01.2007, and that the medical examination conducted on that date recorded no disease. It submitted that the subsequent inwarding of the papers on 07.02.2007 was an internal administrative matter of LIC and could not alter the date borne on the proposal form. The policy schedule itself records the proposal date as 31.01.2007 and the commencement date as 28.01.2007. The respondent contended that Dr. Lahiri’s certificate specifically records the first diagnosis on 05.02.2007, after the proposal had already been submitted and accepted, thus the DLA had no occasion to disclose the disease after diagnosis. Reliance was placed on LIC v. Dharam Vir Anand (1998) 7 SCC 348 and LIC v. Mani Ram (2005) 6 SCC 274 to emphasise that even if a policy is backdated for commencement of risk, the date of the policy remains the date on which it is issued. The respondent maintained that LIC failed to establish that the DLA had knowledge of the cardiac condition at the time of the proposal or that he deliberately suppressed the same.
The Court's Analysis
The Commission first noted that its revisional jurisdiction under Section 58(1)(b) of the Consumer Protection Act, 2019 is circumscribed and is not equivalent to that of an appellate court undertaking a fresh appreciation of evidence; interference is warranted only where there is jurisdictional error, illegality or material irregularity. It then examined the material facts and the competing contentions regarding the timing of disclosure.
The Court observed that the proposal form was filled on 31.01.2007, the DLA was examined by the authorised medical practitioner on the same day, and the first premium cheque was handed over along with the proposal form to the authorised agent on 31.01.2007. Consequently, the facts regarding health were filled in the proposal form at the time of filing the proposal form, i.e., 31.01.2007. Therefore, the DLA had no occasion to make any changes in that proposal form thereafter.
The material relied upon by the Petitioner establishes, at the highest, that the DLA was diagnosed with hypertr ophic cardiomyopathy on 05.02.2007 and that the policy was thereafter issued on 20.02.2007, but it does not by itself establishes that the DLA had consciously failed to disclose it befor e the policy was issued as the proposal form was already filled and handed over to the authorised agent of the petitioner on 31.01.2007.
Even assuming that the duty of disclosure continued until acceptance of the proposal, the Petitioner was required to establish that the DLA had occasion to disclose but deliberately failed to disclose the same. Since the proposal form had already been completed and handed over on 31.01.2007, no such occasion existed after the diagnosis on 05.02.2007.
The Commission further noted that the free look opportunity mandated under IRDA Rules was not provided to the DLA, but this does not create an occasion to alter the proposal form after it has been submitted. The concurrent findings of the District Forum and the State Commission that fraudulent suppression had not been established are therefore correct and suffer from no jurisdictional error, illegality or material irregularity warranting interference in the exercise of the Commission’s revisional jurisdiction.
"In the present case, the material relied upon by the Petitioner establishes, at the highest, that the DLA was diagnosed with hypertr ophic cardiomyopathy on 05.02.2007 and that the policy was thereafter issued on 20.02.2007, but it does not by itself establishes that the DLA had consciously failed to disclose it befor e the policy was issued as the proposal form was already filled and handed over to the authorised agent of the petitioner on 31.01.2007."
Accordingly, the Commission found no basis to disturb the impugned order.
The Verdict
The respondent succeeded. The National Consumer Disputes Redressal Commission dismissed the revision petition (NC/RP/1154/2021) and affirmed the order of the State Consumer Disputes Redressal Commission dated 29.07.2021. Consequently, LIC is directed to pay the sum assured of Rs.5,00,000 with interest at 9% per annum from the date of repudiation till actual payment, additionally Rs.1,00,000 towards deficiency in service and harassment, and Rs.50,000 towards litigation expenses. If the amount is not paid within six weeks from the date of this order (01.10.2026), the outstanding amount shall carry interest at the rate of 12% per annum until realization.
What This Means For Similar Cases
The Date of Policy Issuance Governs Disclosure Duty
Practitioners must assess the timing of disclosures in insurance contracts based on the policy issuance date rather than any retrospective risk commencement date. The date on which the policy is issued is the relevant point for determining whether the insured had knowledge of a material fact and an opportunity to disclose it under the doctrine of utmost good faith.
The Burden of Proving Fraudulent Suppression Remains on the Insurer
To repudiate a policy on grounds of non-disclosure, the insurer must prove that the insured was aware of the fact at the time of proposal (or before acceptance of the proposal) and deliberately concealed it. A mere subsequent diagnosis, without proof of prior knowledge and intentional concealment, is insufficient to establish fraudulent suppression.
Revisional Jurisdiction of the NCDRC Is Limited
Under Section 58(1)(b) of the Consumer Protection Act, 2019, the National Consumer Disputes Redressal Commission cannot re-appreciate evidence afresh. Interference is warranted only where there is jurisdictional error, illegality or material irregularity. In the absence of such grounds, concurrent findings of lower forums on factual issues must be upheld.
- Insurers should obtain and rely on the policy issuance date when evaluating disclosure obligations.
- Claimants need not prove that the insurer had a chance to investigate after a diagnosis if the proposal was already submitted and accepted.
- Revision petitions challenging factual findings will succeed only if a jurisdictional error, illegality or material irregularity is demonstrated.
