Suppression Of Material Facts Makes Policy Voidable At Option Of Insurance Company, NCDRC Dismisses Revision Petition Against Bajaj Allianze Life Insurance Co.

Brief Facts:

The Complainant's deceased wife had two policies with Bajaj Allianze Life Insurance Co. (“Insurance Company”). After her death, the Complainant filed a death claim with the Insurance Company for a maturity sum of Rs. 2.5 lakh each. However, the Insurance Company rejected the claim. It cited non-disclosure of treatments undergone by the deceased wife as the grounds for repudiation. Feeling aggrieved, the Complainant filed a consumer complaint in the District Consumer Disputes Redressal Commission, Sonipat, Haryana (“District Commission”). The District Commission allowed the complaint and directed the Insurance company to pay Rs. 2,50,000/- for each policy with interest, Rs. 2,000/- as compensation and Rs. 2,000/- for litigation costs to the Complainant.

Dissatisfied with the order of the District Commission, the Insurance Company filed an appeal in the State Consumer Disputes Redressal Commission, Haryana (“State Commission”). The State Commission allowed the appeal based on the determination that the deceased was suffering from Acute Gastroenteritis with allied issues, before the purchase of the policies. Since she suppressed this fact at the time of purchasing the said policies, the Complainant was not entitled to claim the insurance amount.

Subsequently, the Complainant filed a revision petition in the National Consumer Disputes Redressal Commission (“NCDRC”).

Observations of the Commission:

The NCDRC observed that the deceased had undisclosed ailments, which were crucial information not disclosed at the time of policy acquisition. The Insurance Company contended that the contract for life insurance is based on utmost good faith, emphasizing the necessity for clear disclosure of all pertinent details, including medical conditions. However, the deceased failed to do so.

The NCDRC referred to Bajaj Allianz Life Insurance Company Ltd. v. Dalbir Kaur, where the Supreme Court held that the proposer must disclose all material facts, particularly pre-existing ailments, to enable the insurer to make an informed decision. The NCDRC also relied on Reliance Life Insurance Co. Ltd. v. Rekhaben Nareshbhai Rathod [(2019) 6 SCC 175], where the Supreme Court held that suppression of facts in the proposal form renders the insurance policy voidable by the insurer. Similarly, in VK Srinivasa Setty Vs M/s Premier Life and General Insurance Co Ltd, the Mysore High Court held that the insured cannot evade consequences by merely signing a proposal form containing untrue statements without reading or understanding it.

Consequently, the NCDRC concluded that the State Commission's order did not have any infirmity warranting interference in revisional jurisdiction. Therefore, the revision petition was dismissed.

Case Title: Subhash Kumar vs Branch Manager, Bajaj Allianze Life Insurance Co. Ltd. and Anr.

Case No.: Revision Petition No. 2049 of 2017

Advocate for the Petitioner: Ms Richa Sharma

Advocate for the Respondents: Ms Shweta Singh Parihar