NCDRC Dismisses Revision Petition by LIC And Imposes Cost In Insurance Claim Dispute

Brief facts of the case:

The Complainant, the brother of the deceased, who had a life insurance policy, filed a complaint with the District Commission. He claimed that his brother had obtained a policy worth Rs. 15 lakhs on November 18, 2009. Unfortunately, Pawan Kumar passed away on November 30, 2009, due to burn injuries caused by certain individuals. An FIR was also filed in this regard.

The deceased had multiple life insurance policies, and the complainant sought to claim the policy amount from LIC. However, the insurance company rejected the claim in March 2012, stating that the deceased failed to disclose the details of a previous policy taken on November 17, 2009, which was required under the proposal form for the policy taken.

Subsequently, the complainant filed a complaint with the District Commission. In 2016, the District Commission ruled in favor of the complainant and allowed the claim. LIC appealed to the State Commission. However, the State Commission upheld the District Commission's decision.

Arguments of the Parties before the Commission:

LIC

LIC challenged the State Commission's order on the grounds that the lower Consumer Commissions made factual and legal errors and based their decisions on incorrect technicalities. Further, they failed to follow the legal precedents set by the Supreme Court and NCDRC, including the case of Satwant Kaur Sandhu, which states that any fact relevant to the insurance contract and affecting the risk involved would be considered material. In this case, the life assured concealed a previous policy taken on November 17, 2009, for Rs. 15 lakhs and misrepresented his annual income as Rs. 2 lakhs, while the total premium for all policies amounted to Rs. 2,30,476/-.They relied on two cases that are not similar and have different facts, making their reliance misconceived.

Morever, they failed to consider that if the total amount of policies exceeded Rs. 35 lakhs, the underwriter would require special reports before issuing the last policy, such as FBS, lipidogram, Hb1AC, and Elisa tests.It argued that the District Commission did not have territorial jurisdiction to hear the case since the policy was obtained from the Rohtak Branch Office, and the case was filed before the District Commission in Jhajjar. No cause of action arose in the Jhajjar District, and merely stating the residence of the insurance agent in Jhajjar does not confer territorial jurisdiction.

Complainant

The complainant argued that the District Commissionallowed the complaint based on its decision Life Insurance Corporation of India Vs. Smt. Shahida Begum and contended that the previous policy dated November 17, 2009 was issued by the same branch office and officers of LIC. Therefore, LIC had knowledge of the policy, and even if the non-disclosure is assumed, it cannot be applied in the present case.

Observations of NCDRC:

The Apex Commission uphold the State Commission’s order and observed that it was correct in upholding the complainant's claim that the non-disclosure of the previous policy in the policy form was because LIC already had knowledge of it which was issued a day before the policy in question and the complainants were not informed and had no prior knowledgethat such information is required to be provided. Therefore, there was no intentional concealment of material facts by the deceased.

Further, the State Commission addressed the issue of territorial jurisdiction of the District Commission adequately and both Consumer Commissions below reached a concurrent decision regarding LIC's liability. The NCDRC observed that Supreme Court in Rubi Chandra Dutta Vs. United India Insurance Co. Ltd.and Sunil Kumar Maity Vs. State Bank of India & Ors held thatthe scope of a Revision Petition is limitedand can only be exercised if there is a prima facie jurisdictional error in the impugned order or had acted in the exercise of its jurisdictionillegally or with material irregularity.Therefore, held there is no jurisdictional error or material irregularity in the orders by the Consumer Commissions below.

Case: Life Insurance Corporation of India vs Jagjit & Anr.

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