The M.P. State Consumer Disputes Redressal Commission has reinforced the principle that insurers cannot repudiate claims based on unsubstantiated investigations, affirming the burden of proof lies squarely with the insurer to establish material suppression with credible, admissible evidence. This ruling strengthens consumer protections under the Consumer Protection Act, 2019, particularly in life insurance disputes where procedural lapses often undermine claimants.
Background & Facts
The Dispute
The complainant, Smt. Lali, wife of the deceased Preetam Singh, filed a complaint before the District Consumer Disputes Redressal Commission, Morena, seeking payment of the insurance sum under the Kotak Classic Endowment Plan. The policy, taken on 16.02.2017, provided a sum assured of Rs. 6,28,880 and a time rider of Rs. 2,00,000, totaling Rs. 8,28,880. The complainant was the sole nominee. The insured died suddenly on 04.04.2017, just 48 days after policy inception. The claim was repudiated by the Insurance Company on 29.12.2017 on grounds of non-disclosure and suppression of material facts.
Key Facts
- The deceased obtained the policy through the Kanpur Branch of Kotak Mahindra Life Insurance Company Ltd.
- The policy term was 28 years with an annual premium of Rs. 28,526
- The complainant submitted all required documents for claim settlement, including death certificate and policy papers
- The Insurance Company alleged the deceased concealed:
- Pre-existing pulmonary tuberculosis
- Three prior insurance policies from other companies
- True income level (claimed Rs. 3 lakhs annually; alleged to be a BPL cardholder)
- The Insurance Company relied on an investigation report (Annexure D-5) filed before the District Commission
- The complainant submitted an affidavit denying the allegations and asserting that all policy documents were disclosed to the agent
Procedural History
- 16.02.2017: Policy issued under Kotak Classic Endowment Plan
- 04.04.2017: Death of insured, Preetam Singh
- 29.12.2017: Insurance Company issued repudiation letter
- 20.01.2019: Complaint filed before District Consumer Disputes Redressal Commission, Morena (Complaint No. 200/2019)
- 06.06.2022: District Commission allowed complaint, directed payment of claim with 6% interest and Rs. 2,500 costs
- 15.07.2022: Insurance Company filed application under Order 41 Rule 27 CPC before the State Commission seeking to produce additional documents
- 25.06.2022: Insurance Company submitted a second investigation report (post-order)
- 17.03.2026: Appeal heard and decided by M.P. State Consumer Commission
Relief Sought
The Insurance Company sought to set aside the District Commission’s order, repudiate the claim entirely, and dismiss the complaint. The complainant sought enforcement of the District Commission’s order, including payment of Rs. 8,28,880 with 6% interest and costs.
The Legal Issue
The central question was whether an insurer can lawfully repudiate a life insurance claim based on an investigation report that lacks an affidavit from the investigating officer, and whether mere allegations of non-disclosure, unsupported by admissible evidence, constitute deficiency in service under the Consumer Protection Act.
Arguments Presented
For the Appellant
The Insurance Company contended that the deceased had suppressed material facts regarding his health (pulmonary tuberculosis), prior insurance policies, and income, thereby violating the principle of uberrimae fidei (utmost good faith). It relied on its internal investigation report (Annexure D-5) and sought to introduce a subsequent report dated 25.06.2022 under Order 41 Rule 27 CPC. Counsel argued that the District Commission erred in not permitting additional evidence and that the claim was rightly denied under Clause 11.1, 9.1, and Clause 1 of the proposal form.
For the Respondent
The complainant, through her pleadings and affidavit, denied all allegations of suppression. She asserted that all documents, including details of prior policies, were disclosed to the agent at the time of proposal. No legal representation appeared for the respondent before the State Commission, but the District Commission’s findings in her favor were relied upon.
The Court's Analysis
The Commission emphasized that while the doctrine of uberrimae fidei imposes a duty of full disclosure on the insured, the burden of proving suppression lies with the insurer. The Court noted that the investigation report (Annexure D-5) filed before the District Commission contained no mention of pulmonary tuberculosis, despite the repudiation letter citing it as a ground. The report was also not accompanied by an affidavit from the investigating officer, rendering it inadmissible under the rules of evidence applicable to consumer forums.
"In the absence of an affidavit of the Investigator, the documents cannot be relied upon."
The Court further observed that the subsequent investigation report dated 25.06.2022, filed after the impugned order, was not only belated but also lacked any explanation for non-production before the District Commission. The Commission held that Order 41 Rule 27 CPC does not permit introduction of evidence that could have been produced earlier without sufficient cause.
The Court rejected the insurer’s attempt to rely on unverified documents and unsworn reports. It held that allegations of concealment, unsupported by credible, sworn evidence, cannot override the prima facie validity of a claim submitted with all required documents. The District Commission’s finding of deficiency in service was therefore legally sound.
The Verdict
The appeal was dismissed. The M.P. State Consumer Commission affirmed the District Commission’s order dated 06.06.2022, directing the Insurance Company to pay the claim amount of Rs. 8,28,880 within 30 days, with interest at 6% per annum from the date of repudiation (29.12.2017) until realization, and costs of Rs. 2,500. No further costs were awarded.
What This Means For Similar Cases
Affidavit-Backed Evidence Is Mandatory for Repudiation
- Practitioners must ensure insurers produce sworn affidavits from investigators before any allegation of non-disclosure can be considered
- Unsworn internal reports, even if detailed, are inadmissible in consumer forums
- Failure to produce affidavits at the first instance bars reliance on such evidence in appeal
Burden of Proof Rests on the Insurer
- Mere suspicion or allegation of concealment is insufficient to deny a claim
- The insurer must prove material suppression with documentary and testimonial evidence that meets evidentiary standards
- Consumer forums will not accept speculative or post-hoc investigations as justification for repudiation
Territorial Jurisdiction Is Not a Defense When Service Is Rendered Nationally
- Although the policy was issued in Kanpur, the complainant resided in Morena and filed the claim from there
- The Commission implicitly upheld that consumer complaints may be filed where the complainant resides, especially when the insurer operates nationally
- This reinforces the liberal jurisdictional approach under the Consumer Protection Act, 2019
