AVM Jonnalagadda Rajendra, AVSM, VSM (Retd), Presiding Member

The present First Appeal has been filed under Section 51 of the Consumer Protection Act, 2019 ('the Act') against the Order dated 23.11.2021 passed by the State Consumer Disputes Redressal Commission, Delhi ('the State Commission') in Consumer Complaint No. 551 of 2016, whereby the Complaint was allowed.

2. There is 15 days delay in filing the present First Appeal. In view of the facts and circumstances of the case, the delay is condoned.

3. For convenience, the parties are being referred to as they were before the State Commission. 'Smt. Chanda Devi,' the wife and nominee of the Life Assured Shri Ram (since deceased), is the Complainant/ Respondent. The 'Life Insurance Corporation of India' (LIC) is Appellant/ Opposite Party/Insurer.

4. Brief facts of the case, as per the complaint, are that the husband of the Complainant Shri Ram ('Deceased Life Assured' or 'DLA') had obtained a Life Insurance - Jeevan Mitra Policy No. 125804443 under Table and Term 133-21-21 for a sum assured of Rs. 8,00,000. The policy commenced on 28.08.2011, with the risk coverage period from 22.11.2011 to 28.08.2032. The first annual premium of Rs.64,462 was paid at the time of proposal No. 1996 on 09.09.2011. Unfortunately, during the subsistence of the policy, the DLA died on 23.04.2014 due to 'Chronic Liver Disease, Acute Gastroenteritis and Anal Fissures.' The Complainant filed a claim on 14.07.2014, but the same was repudiated on 27.11.2015 on the grounds that the insured had allegedly obtained the policy fraudulently by suppressing material facts regarding his health.

5. Aggrieved by the repudiation of her claim and alleging deficiency in service and unfair trade practices, the Complainant filed Consumer Complaint No. 551 of 2016 before the State Commission seeking payment of the remaining claim amount of Rs. 22,06,614 along with interest from the date of filing the claim until realization. She also sought compensation of Rs. 1,00,000 for negligence and deficient service, and Rs. 20,000/- towards litigation costs.

6. On being issued notice, the OPs filed their written version and contended that the DLA was treated at Rockland Hospital from 27.01.2011 to 04.02.2011. Further, even prior to that he was treated, both on an inpatient and OPD basis. During this period, he was diagnosed with Duodenitis with Malabsorption Syndrome, Ileocecal Ulceration, Koch's Abdomen, and Pancytopenia with Dyslipidemia. The OPs asserted that the DLA failed to disclose these ailments at the time of submitting the proposal form dated 09.09.2011 and thereby procured the policy by suppressing material facts. The OPs further contended that Shri Ram died on 23.04.2014 due to 'Chronic Liver Disease, Acute Gastroenteritis, Anal Fissure,' as per the certificate issued by Vinayak Hospital, and the cause of death was related to his earlier undisclosed medical conditions. On these grounds, the claim was repudiated and the OPs denied any deficiency in service or unfair trader practices.

7. The learned State Commission allowed the complaint vide Order dated 23.11.2021 and with the following observations: -

                        '14. We further find that as per the special provisions of the said policy annexed at page 15 of the complaint, the opposite parties are liable to pay additional amount equal to twice the Sum Assured, in the event of Life assured death prior to the date of maturity of the said policy. It is clear from the evidence on record that the Sum Assured as per the said policy is Rs. 8,00,000/-, the date of maturity is 28.08.2032 and the life assured expired on 14.07.2014. Therefore, the opposite parties are liable to pay Rs. 24,00,000/- to the complainant as per the said policy conditions.

                        15. It is clear from the evidence before us that an amount of Rs. 1,93,386/- had already been paid to the complainant vide letter dated 28.01.2015. Keeping in view the facts of the present case and the extensive law as discussed above, we direct the Opposite Parties to pay Rs.22,06,614/- along with interest as per the following arrangement:

                        A. An interest @ 6 % calculated from the date on which the claim was repudiated by the Opposite Parties i.e. 27.11.2015 till 23.11.2021 (being the date of the present judgment); B. The rate of interest payable as per the aforesaid clause (A) is subject to the condition that the Opposite Parties pays the entire amount on or before 22.01.2022;

                        C. Being guided by the principles as discussed above, in case the Opposite Party fails to pay the amount as per the aforesaid clause (A) on or before 22.01.2022, the entire amount is to be refunded along with an interest @ 9% p.a. calculated from the date on which the claim was repudiated by the Opposite Party till the actual realization of the amount.

                        16. In addition to the aforesaid and taking into consideration the facts of the present case, the Opposite Parties are directed to pay a sum of:

                        A. Rs. 1,00,000/- as cost for mental agony and harassment to the complainant; and

                        B. The litigation cost to the extent of Rs. 50,000/-.'

8. Being aggrieved by the said order, the OP (Appellant herein) has filed this present Appeal No.34 of 2022 with the following prayer:

Under the facts and circumstances mentioned above it is therefore most respectfully prayed that this Hon'ble Forum may kindly be pleased to accept the present appeal and set aside the impugned order dated 23.11.2021 passed by the Hon'ble Delhi State Commission, in CC No.551/2016 titled as Chanda Devi V The Manager Claims, LIC of India and be pleased to dismiss the CC No.551/2016 in the interest of justice

Pass any other order or give directions which this Hon'ble Commission thinks fit and proper in the facts and circumstances of the case.

9. Upon notice on the memo of Appeal, the Respondent has filed reply through her Counsel.

10. It is pertinent to note that First Appeal No. 34 of 2022 had earlier been decided by this Commission vide order dated 12.03.2025. Thereafter, the Appellants/OPs filed Review Application No. 50 of 2025, which came to be dismissed on 28.04.2025. Aggrieved thereby, the Appellants preferred CM(M) 1004/2025 along with CM APPL. 33018-33019/ 2025 before the Hon'ble High Court of Delhi. The Hon'ble High Court, vide order dated 26.05.2025, disposed of the petition with a direction/ request to this Commission to reconsider the aforesaid Review Application. Consequently, the Review Application was reheard and allowed vide order dated 18.11.2025, whereafter First Appeal No. 34 of 2022 was heard afresh on merits.

11. The learned Counsel for the Appellants/OPs reiterated the grounds urged in the reply and memorandum of appeal, contending that the learned State Commission failed to properly appreciate the material facts and evidence. He argued that the Deceased Life Assured (DLA), despite being specifically questioned in the Proposal Form dated 09.09.2011, deliberately suppressed material information regarding his prior medical treatment from 27.01.2011 to 04.02.2011. During the said period, he was diagnosed with Duodenitis with Malabsorption Syndrome, Ileocecal Ulceration, Koch's Abdomen, and Pancytopenia with Dyslipidemia, as evidenced from medical records and employer correspondence. The learned counsel argued that the DLA provided false answers both in the Proposal Form and during the medical examination, thereby misleading the insurer and frustrating the underwriting process, since these ailments could not have been detected through general physical examination, unless voluntarily disclosed. The discharge summary and death certificate further revealed that the DLA died of Chronic Liver Disease, which, according to the Appellants, had direct nexus with the suppressed pre-existing medical conditions. The learned counsel asserted that ample documentary evidence, including employer certificates, hospital records, medical leave documents, and treatment summaries, none of which were disputed by the Complainant, conclusively established the fraudulent suppression, justifying repudiation. It was further argued that the findings of State Commission are perverse, contrary to records and legally unsustainable. In support of his arguments, he relied on Satwant Kaur Sandhu v New India Assurance (2009) 8 SCC 316; LIC v. Manish Gupta, AIR 2019 SC 2606; Bajaj Allianz v. Dalbir Kaur, AIR 2020 SC 5210; LIC v Kusum Patro, RP No 1585 of 2011 (NCDRC); Reliance Life Insurance Co v Rekhaben Nareshbhai Rathod (2019) 6 SCC 175.

12. The learned Counsel for the Respondent/Complainant opposed the Appeal and argued that the impugned order is reasoned, lawful, and supported by evidence. The Appeal was frivolous, intended to delay their legitimate entitlement. It was contended that under Section 45 of the Insurance Act, 1938 (as amended in 2015), the insurer was barred from repudiating the claim after receiving premiums for more than three years, and further, that the proposal form had been filled by the insurer's agent, thereby binding the insurer as principal. It was submitted that the DLA underwent medical examination by the insurer's empanelled doctors at the time of policy issuance, who certified him as healthy, thus ruling out any non-disclosed ailment of material significance. He asserted that, once the three-year period had elapsed, the insurer was mandatorily required to honour the claim, and the attempt to refund only Rs.1,93,383 instead of settling the full death claim of Rs. 24,00,000 amounted to deficiency in service and unfair trade practice. He asserted that the medical documents relied upon by the OP were contradictory and unreliable, and that no nexus existed between the alleged earlier diagnosis and the cause of death. The Full Medical Report dated 24.09.2011, indicating no abnormalities, was relied upon. He relied upon the following judgments: LIC of India v. Jaswinder Kaur, LNINDORD 2019 NCDRC 433; Dipashri v. LIC, LNIND 1983 BOM 162; R. Subbulakshmi v. LIC, LNINDORD 2017 BMM 7512; Ranjita Jain v. Manager D.O. II, LNIND 2010 SCDRCD 168; Bhuvnesh Gupta v. LIC, MANU/CF/0870/2024; and Santosh Kumar v Insurance Ombudsman, MANU/UP/0890/2025 in support of his arguments.

13. We have examined the pleadings and associated documents placed on record and rendered thoughtful consideration ed the submissions advanced by learned Counsel for both parties.

14. The core issue for determination pertains to the repudiation of the death claim by the OP/ insurer. The main issued to be determined are (i) whether the DLA suppressed or concealed any material facts regarding his health while obtaining the policy; (ii) whether the medical documents filed by the Appellants at the appellate stage are admissible in evidence; and (iii) whether the impugned order warrants interference.

15. It is undisputed that the Complainant's husband, Shri Ram, had obtained a Jeevan Mitra Policy No. 125804443 for a sum assured of Rs.8,00,000 under Table and Term 133-21-21. The policy commenced on 28.08.2011 and risk commenced on 22.11.2011. The first premium of Rs. 64,462 was paid on 09.09.2011. The DLA unfortunately died on 23.04.2014. The Complainant claim the filed on 14.07.2014 and the same was repudiated by the OP Insurer on 27.11.2015, on the grounds that the policy had not crossed the three-year bar under Section 45 of the Insurance Act and that the DLA had suppressed material facts.

16. Section 45 of the Insurance Act, 1938, as amended, governs the circumstances under which a life insurance policy may be questioned. The provision is reproduced hereinabove for ready reference as under:

                        45. Policy not be called in question on ground of misstatement after three years. -(1) No policy of life insurance shall be called in question on any ground whatsoever after the expiry of three years from the date of the policy, i.e., from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later.

                        (2) A policy of life insurance may be called in question at any time within three years from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later, on the ground of fraud:

                        Provided that the insurer shall have to communicate in writing to the insured or the legal representatives or nominees or assignees of the insured the grounds and materials on which such decision is based.

                        Explanation I. -For the purposes of this sub-section, the expression 'fraud' means any of the following acts committed by the insured or by his agent, with intent to deceive the insurer or to induce the insurer to issue a life insurance policy:

                        (a) the suggestion, as a fact of that which is not true and which the insured does not believe to be true;

                        (b) the active concealment of a fact by the insured having knowledge or belief of the fact;

                        (c) any other act fitted to deceive; and

                        (d) any such act or omission as the law specially declares to be fraudulent.

                        Explanation II. -Mere silence as to facts likely to affect the assessment of the risk by the insurer is not fraud, unless the circumstances of the case are such that regard being had to them, it is the duty of the insured or his agent keeping silence, to speak, or unless his silence is, in itself, equivalent to speak.

                        (3) Notwithstanding anything contained in sub-section (2), no insurer shall repudiate a life insurance policy on the ground of fraud if the insured can prove that the misstatement of or suppression of a material fact was true to the best of his knowledge and belief or that there was no deliberate intention to suppress the fact or that such misstatement of or suppression of a material fact are within the knowledge of the insurer:

                        Provided that in case of fraud, the onus of disproving lies upon the beneficiaries, in case the policyholder is not alive.

                        Explanation. -A person who solicits and negotiates a contract of insurance shall be deemed for the purpose of the formation of the contract, to be the agent of the insurer.

                        (4) A policy of life insurance may be called in question at any time within three years from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later, on the ground that any statement of or suppression of a fact material to the expectancy of the life of the insured was incorrectly made in the proposal or other document on the basis of which the policy was issued or revived or rider issued:

                        Provided that the insurer shall have to communicate in writing to the insured or the legal representatives or nominees or assignees of the insured the grounds and materials on which such decision to repudiate the policy of life insurance is based:

                        Provided further that in case of repudiation of the policy on the ground of misstatement or suppression of a material fact, and not on the ground of fraud, the premiums collected on the policy till the date of repudiation shall be paid to the insured or the legal representatives or nominees or assignees of the insured within a period of ninety days from the date of such repudiation.

                        Explanation. -For the purposes of this sub-section, the misstatement of or suppression of fact shall not be considered material unless it has a direct bearing on the risk undertaken by the insurer, the onus is on the insurer to show that had the insurer been aware of the said fact no life insurance policy would have been issued to the insured.

                        (5) Nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal.]

17. The insured while entering the details of his personal history in Para (11) of the Proposal Form signed by him answered as follows: