Concealment Of Facts By Insured Can Make Policy Voidable: NCDRC

Brief Facts of the Case

The complainants purchased two insurance policies, “Jeevan Aarogya-903,” for their son Tushar Jangid from Life Insurance Corporation/insurer. They fully disclosed their son's health condition to the insurer's agents, providing a Medical Imaging Report indicating an issue with his left testis. The agents assured them that the policy would cover medical expenses related to this condition, including a procedure called "unilateral orchiectomy," listed among the policy benefits. In 2014, the complainants had the surgery done at Pacific Medical College & Hospitals in Udaipur and subsequently filed a claim for Rs. 2,00,000 under both insurance policies. Despite submitting the necessary documents multiple times, the insurer neither approved the claim nor formally rejected it. After several unsuccessful attempts to obtain a response from the insurer, including registered letters sent in August and September, the complainants filed a complaint before the District Forum. The District Forum dismissed the complaint, following which the complainant appealed before the State Commission of Rajasthan, which upheld the District Forum's order and dismissed the appeal. Consequently, the complainant filed a revision petition before the National Commission.

Contentions of the Insurer

The insurer argued that the complainants concealed significant information while completing the proposal form, specifically regarding their son's congenital disorder. They noted that the complainants had answered “NO” to Question No. 10(7)(xii), which pertains to congenital disorders. The insurer claimed that this alleged misrepresentation warranted the rejection of the claim, asserting that both parties are bound by the terms of the insurance contract.

Observations by the National Commission

The National Commission observed that the case involves the insurer's rejection of a claim under a LIC's Jeevan Arogya policy. The commission determined that the complainants failed to disclose their medical condition when obtaining the policies. This position is supported by the Supreme Court in Bajaj Allianz Life Insurance Company Ltd. v. Dalbir Kaur, which states that a proposer must disclose all material facts affecting the insurer's risk assessment. Similar principles were reiterated in Reliance Life Insurance Co. Ltd. v. Rekhaben Nareshbhai Rathod, emphasizing that any suppression of facts can render the policy voidable. Furthermore, the Supreme Court in Rubi Chandra Dutta v. United India Insurance Co. Ltd. held that the scope of a revision petition is limited to jurisdictional errors in the lower orders. The court also noted that revisional jurisdiction under Section 21(b) of the Consumer Protection Act should only be exercised under specific circumstances, as highlighted in Sunil Kumar Maity v. State Bank of India & Ors. and Rajiv Shukla v. Gold Rush Sales & Services Ltd..

Considering these legal precedents, the commission found no illegality in the order of the State Commission, leading to the dismissal of the revision petition.

Case Title: Subhash Chandra Sharma & Anr. Vs. Life Insurance Corporation Of India & 2 Ors.

Case Number: R.P. No. 19/2023

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