Sudip Ahluwalia, Member

This Consumer Complaint has been filed under Section 21 (a)(i) of the Consumer Protection Act, 1986, challenging the repudiation of the Life Insurance Policy by the Opposite Parties.

2. The factual background, in brief, is that the Deceased Life Assured (DLA) had taken a Life Insurance Policy under Policy No. 21420994, issued by the Opposite Parties under the "Met Family Income Protector Plus Plan". The Policy, commencing from 31.10.2014, was for a term of 15 years, with an assured sum of Rs. 1.2 Crores and an annual premium of Rs. 1,21,830/-. The first premium, amounting to Rs. 1,36,888/-, was duily paid by the deceased insured, and the Complainant was nominated as the beneficiary. The deceased, having only matriculated, was assisted in filling-up the Policy Proposal Form by an Authorized Agent of the Opposite Parties, who wrote the form in her own hand and marked the responses, including indicating "no previous policy" in response to a query regarding earlier Insurance Policies with other Insurers. The deceased merely signed where directed. Subsequently, in February 2015, the deceased contracted H1N1 Swine Influenza and was hospitalized in ICU from 26.02.2015 until his death on 12.03.2015. The Complainant incurred approximately Rs. 4.00 lakhs in treatment expenses. The Death Certificate was issued on 19.03.2015. She submitted the Insurance Claim form on 22.04.2015 along with supporting documentation. The Opposite Parties acknowledged the Claim and requested further documents, which were duly provided. Despite a prolonged delay involving multiple investigations by the Opposite Parties' appointed Agencies, no discrepancies were found regarding the cause of death, However, to the Complainant's shock, the Claim was repudiated vide letter dated 12.03.2016 on the ground that the deceased had failed to disclose three prior Insurance Policies with Birla Sun Life Insurance Company (BSLIC) bearing Nos. 005193546, 005193866, and 005319748. The Opposite Parties contended that such non-disclosure amounted to a fraud and rendered the Policy void under Section 45 of the Insurance Act, 1938.

3. The Complainant, however, clarified that Policies bearing Nos. 005193546 and 005193866 were cancelled by the Insurer on the very same day the Application for those Policies was submitted (21.12.2011), and the respective cheques were returned on 23.12.2011. Policy No. 005319748 was a terminated Health Plan, not a Life Insurance Policy, and only covered Hospital admissions, offering no death benefit. Therefore, no disclosure was warranted, as no Insurance Contracts in force existed at the time of taking the impugned Policy. Moreover, these Policies were not material to the risk assumed by the Opposite Parties. It was further submitted that the Policy Proposal Form is ambiguous in its language, seeking disclosure of only "Life Insurance Policies" that are "in force", "lapsed", or "revived". The omission of terminated or never-effective Health Policies cannot be construed as fraudulent suppression. It is the case of the Complainant that even if the Insurer's stance under the amended Section 45 of Insurance Act is considered, the repudiation remains legally unsustainable. Section 45(2) requires proof of intent to deceive, which is absent in the present case. Section 45(4) is also (inapplicable, as the alleged non-disclosures do not relate to the life expectancy of the deceased. Additionally, the refusal of the Opposite Parties to refund the premium, despite no proof of fraud, amounts to a deficiency of service and unjust enrichment. Aggrieved with the same, the present Complaint was filed with the following prayers -

                   "a. Direct the OPs to pay the Complainant the amount of the sum insured on the Impugned Policy being a sum of Rs. 1,20,00,000/- (Rupees One Crore and Twenty Lacs only) along with 18% interest from the date of submission of claim form on 22.04.2015 till the date of payment to the Complainant;

                   b. Direct the OPs to give compensation to the Complainant to the tune of Rs. 50,00,000/- (Rupees Fifty Lacs only) for mental agony, trauma and harassment;

                   c. Grant pendent lite and future interest at 18% p.a. on all amounts found due to the Complainant from the OPs from the date of filing of the instant Complaint till the date of actual receipt of such amounts by the Complainant;

                   d. Grant exemplary costs, including costs of litigation, in favour of the Complainant and against the OPs;"

4. The Opposite Parties have filed their Written Statement and resisted the Complaint. They have denied all the material averments made by the Complainant. The Opposite Parties have averred that the impugned Insurance Policy was rightfully repudiated due to material non-disclosure by the DLA, who, at the time of filling-up the Proposal Form, failed to disclose his previous existing Insurance Policies with Birla Sun Life Insurance. This non-disclosure constituted a suppression of material facts, rendering the Contract voidable under Section 45 of the Insurance Act, 1938. The Opposite Parties have placed reliance on the decisions of this Commission in "Dinesh Bhai Chandarana & Anr. v. LIC of India, III (2010) CPJ 358 (NC)" and "LIC of India v. Smt. Vidya Devi & Anr., RP No. 382 of 2011", where similar repudiations were upheld on grounds of non-disclosure. Further reliance has been placed on the decision of the Hon'ble Supreme Court in "Satwant Kaur Sandhu v. New India Assurance Co. Ltd., (2009) 8 SCC 316", in which it was clarified that any fact that could influence the decision of a prudent Insurer is a material fact, and inaccurate responses to Proposal Form questions can entitle the Insurer to repudiate liability; That the deceased, after being explained the terms of the "Met Family Income Protector Plus" Policy, voluntarily filled and signed the Proposal Form, declaring all information to be true. Based on this representation, Policy No. 21420994 was issued on 31.10.2014 for a sum assured of Rs. 1.20 crores, against an annual premium of Rs. 1,21,830/-. In the Proposal Form, the DLA had categorically declared "no previous policies" despite having previously applied for three Policies with Birla Sun Life Insurance. Even if such Policies were later cancelled or terminated, the act of prior application or rejection is deemed material and should have been disclosed. Such suppression directly vitiated the Insurer's ability to underwrite risk.

5. The Opposite Parties have further averred in their Written Statement that upon receiving the Claim Form dated 22.04.2015, and noting the early nature of the Claim (within 6 months of Policy issuance), a detailed investigation was initiated. It revealed the existence of prior Policies amounting to approximately Rs. 60.00 lakhs, which had not been disclosed; That under the principle of uberrima fidei, the insured was obligated to disclose all the facts affecting risk assessment, especially his previous Policy history; That the DLA's act of omitting details in the specific Column regarding prior insurance, while answering "no previous policy" constituted a deliberate concealment. The Insurer, having relied upon this misrepresentation, was entitled to treat the Contract as null and void; That there was no deficiency in service or unfair trade practice on their part, as all actions were undertaken in good faith, iin accordance with law, and based on standard IRDA-approved procedures. The Complaint is therefore baseless, misconceived, lacks a cause of action, and was filed with malafide intent to claim benefits not legally due. The contention that the deceased was uneducated or misled by any Insurance Agent is denied. The deceased understood and accepted the Policy terms voluntarily and confirmed the truth of all information provided. The repudiation was therefore squarely within legal bounds, particularly in terms of Section 45 of the Insurance Act, which allows an Insurer to repudiate a Policy within two years of its issuance, if there is proof of fraudulent suppression of material facts known to be false by the Policyholder.

6. Rejoinder on behalf of the Complainant to the Written Statement by the Opposite Parties has been filed; It has been averred in the Rejoinder that the Opposite Parties' reliance on judgments such as "Dinesh Bhai Chandarana v. UC" (supra), "LIC v. Vidya Devi" (supra), and "Satwant Kaur Sandhu v. New India Assurance Co. Ltd." (supra) is misplaced, as the present case is factually distinguishable. The DLA had not deliberately or fraudulently withheld any material facts, and that the Policies referred to by the Opposite Parties were either Health Insurance Plans or proposals that never resulted in enforceable Contracts and thus were not material for underwriting the impugned Policy; That the Proposal Form was filled entirely by the Opposite Parties' own Insurance Agent and that the DLA, being only matriculate and not equipped to comprehend the legal implications of the Form, merely signed where directed; That the ambiguity in Question D of the form, which referred to "policies in force/lapsed/revived" did not require disclosure of terminated or unissued Policies, and this ambiguity should be construed in favour of the Insured by application of the doctrine of contra proferentem; That the Opposite Parties failed to prove that the alleged misstatement pertained to a "material matter" as required under Section 45 of the Insurance Act, 1938. It was emphasized that the term "material" is not defined in the Act and has been judicially interpreted to mean facts that directly influence the underwriting risk. Since the past Policies in question had no bearing on the life expectancy or health condition of the deceased, who died from H1N1, an unforeseen viral illness, there was no concealment of any material fact.

7. It has been further averred in the Rejoinder that the Opposite Parties have failed to discharge their burden under Section 45 by not proving the existence of any fraudulent intent, or that the DLA knew of the falsity of any statement at the time of signing the Proposal. In fact, the repudiation was based not on a health-related misstatement but merely on alleged non-disclosure of unrelated insurance history, which was either terminated or not in force. The Complainant also denies any intent to cheat or mislead the Opposite Parties and clarifies that the Claim was genuine, lawfully pursued, and not an abuse of the process as alleged; That the repudiation was arbitrary, unsupported by evidence, and constituted a deficiency in service and an unfair trade practice, thereby squarely bringing the Complaint within the ambit of a "Consumer dispute" under the Consumer Protection Act.

8. Evidence by way of Affidavit has been filed by Complainant Smt. Balbir Kaur; Evidence by way of Affidavit has been filed on behalf of the Opposite Party Nos. 1 and 2 by Mr. Rajeev Sharma, Senior Manager -Legal of M/s PNB MetLife India Insurance Co. Ltd.

9. Heard Ld. Counsel for Complainant and the Opposite Parties, and perused the material available on record.

10. The Claim of the Complainant was repudiated by the Opposite Parties with the following remarks -

                   "....While verifying the claim, we have found that prior to solicitation of the impugned insurance policy Late Mr. Iqbal Singh Bedi was already insured with other life insurance companies, as follows :



                   In this case, the above mentioned fact was a material fact for the purposes of underwriting the risk. If this material fact was disclosed to us in the application form, we would not have issued the policy on existing terms. The same was not disclosed to us intentionally and fraudulently at the time of solicitation of the above referenced policy in spite of a specific question posed to Late Mr. Iqbal Singh Bedi in the application form dated 29/10/2014, which was answered as "NO".

                   Therefore, through this letter, we therefore regret to inform you that we are unable to admit liability for the above claim due to intentional nondisclosure of material facts, as highlighted herein above, and fraud committed to deceive the company after misleading it to issue the policy. All the premiums paid under this policy stand forfeited and in accordance to the provisions of Sec. 45 of the Insurance Act 1938, as amended from time to time...."

11. It is, therefore, clear that the categorical ground on which the Claim was repudiated, was that the deceased life assured "was already insured" with another Life Insurance Company, the details of which were mentioned in the repudiation letter dated 12.3.2016. It has, however, transpired that two of the aforesaid Policies bearing Nos. 005193866 and 005193546 were non-existent on the date the deceased life assured had filled up the Proposal Form (29.10.2014). It is the categorical case of the Complainant that the premium amount of Rs. 21,663/- and Rs. 51,400/- towards these two Policies, which had been applied for with Birla Sunlife on 21.12.2011, was returned by the Insurer on the same date, and that the Policies consequently stood cancelled. This position has not been contradicted on behalf of the Opposite Party, and is in fact confirmed from Annexure- OP-2 which is a part of the evidence by way of Affidavit of OP-1&2, Shri Rajeev Sharma, Sr. Manager-Legal of the Opposite Party No.1, which is on Page 34 of his Affidavit. The said page happens to be a print out of the mail sent by Birla Sunlife Insurance to the Opposite Parties on 17.2.2016 in which it has been clearly mentioned that the status of the aforesaid two Policies was "REJECTED" thereby confirming that the aforesaid Policies were not in existence.

12. Regarding the Third Policy bearing No. 005319748, contention of the Complainant is that it was only a "Health Plan Policy" providing cover only for "Hospital admission", and never was a Policy on the life of the Insured. Therefore, there was no suppression on the part of the insured in not disclosing about this Policy because it was totally different from the nature of the Policy taken by him from the Opposite Parties. We are in agreement with this submission since it is common-sense that for disclosing about the particulars related to any previously taken Policies, it is a sine qua non that the coverage of such Policies would have to be identical or at least very similar with the Policy under Proposal. For example, an Insured insuring his life might be the Owner of several vehicles for which he takes various Policies in his name. But the coverage of those Policies would extend to the liability pertaining to the vehicles, and not the own life of the assured. Consequently, the fact that the Policy No. 005319748 was a "Health Plan" and not a Policy on the life of the Insured, would put it on an altogether different pedestal, which the insured was certainly not liable to disclose in his Proposal Form.

13. At any rate, it has transpired that coverage in the said Policy had itself stood terminated a year after the date of its issuance (13.1.2012), on account of the fact that payment of Premium for the following year was not made by the Insured. Such terminated coverage status has been verified by us from Annexure- C16 which is on Page 150 of the Complaint/Paper Book.

14. Even otherwise, a glance over the relevant column in the Proposal Form which required the insured to disclose about his previous Insurance Policies would go to indicate that the queries which the Proposer was required to offer, were ex facie ambiguous or confusing. The format of the aforesaid column in the Proposal Form is set out as below -



15. In "Mahakali Sujatha Vs. Future General India Life Insurance, 2024 INSC 296", the Hon'ble Apex Court had observed in a very similar situation, that there was a suppression of material contents by the Insured in the Proposal Form. The query in the aforesaid case was virtually identical with that as in the present case. Such query in Mahakali Sujatha Vs. Future General India Life Insurance", (supra) happens to be as follows -

                   "6.1 Details of applications submitted to & existing life insurance policies with future Generali and with any insurer. (In case of housewife, major student or minor life to be Assured please give details of husbands and parents insurance also)"

16. The Hon'ble Apex Court in this regard observed inter alia -

                   "On a reading of Query 6.1, what was sought was details of applications submitted to and existing life insurance policies with Future Generali (respondent company) and with any (other) insurer. Further details sought were in case of housewife, major student or minor life to be assured and to give details of husband's and parents' insurance also. It is not clear as to whether Query 6.1 referred to details of insurance policy of the proposer with Future Generali and with any other insurer, as what was also sought was details of wife, major student or a minor life to be assured and to give details of the husband's and parents' insurance. Therefore, it is not clear from reading of Query 6.1 as to whether details of insurance policy of the insured with Future Generali and with other insurer were sought or the query related to the details of husband and parents' insurance policy being disclosed in case the insured was a housewife, major student or a minor life when the insured was a housewife or a minor child..... " (Emphasis added)

17. The Hon'ble Court further went on to observe -

                   "40. Insofar as the Query 6.1 is concerned, it is noted that the same is not clear and it is not known in what context the details of the insured were sought with regard to any existing life insurance policy. On a reading of Query 6.1 holistically, it is also not clear regarding the nature of information that was sought by the respondent insurance company as discussed above. The Page 34 of 48 Civil Appeal No.3821 of 2024 answer given by the insured to the Query 6.1 was thus in the negative. In this backdrop, can it be said that there was a suppression of material fact by the insured in the proposal form. In this context, it is necessary to place reliance on the contra proferentem rule...." (Emphasis added)

18. Consequently, the Hon'ble Supreme Court concluded that -"Having regard to the aforesaid discussion on contra proferentem rule, it is noted that the Queries 6.1 and 6.2 are not clear in themselves as we have discussed the same above. Therefore, the answer given by the deceased cannot be taken in a manner so as to negate the benefit of the policy by repudiation of the same on the demise of the insured."

19. Such observations of the Hon'ble Supreme Court are directly applicable to the facts and circumstances of the present case. It may be mentioned that while there were two separate queries made by the Insurer in "Mahakali Sujatha Vs. Future General India Life Insurance" (supra), in the present case, the only query in this regard corresponds to query No. 6.1 in the Proposal Form which is similarly found to be ambiguous as it is not clear whether the query D in the present case refers to the details of the Insurance Policies of the Proposer himself, or of his family members with PNB Metlife India, or with any other Insurer, as what was also sought were the details of his family members.

20. At any rate, as already seen in respect of Policy bearing Nos. 005193866 and 005193546, the same were non-existent on the date the Proposal Form was filled up, and even the third Policy bearing No. 005319748 had already stood terminated a year after the date of its issuance, as no payment of premium following the First year was made by the Insured. When the matter came up for Final Hearing before us, we granted an opportunity to Ld. Counsel for the Opposite Party(ies)/Insurer(s) on 16.1.2026 to place on record appropriate documents to show that the Policy in question was actually a "Life Insurance" and not a "Health Plan Policy" meant only for "Hospital admission" as claimed on behalf of the Complainant. But the Opposite Party(ies) have failed to place on record any copy of the said disputed Policy itself, on account of which we have no other option but to accept the contention of the Complainant that not only it was only a "Health Plan Policy", but that it had already lapsed a year after 13.1.2012, and was not subsisting, as sought to be implied on behalf of the Opposite Party(ies)/Insurer(s).

21. In this regard, a recent decision of the Hon'ble Supreme Court in SLP (C) No. 12081 of 2021 is directly on the point, in which it had been observed inter alia -

                   "In the present case, the High Court has noted in paragraph 17 of the impugned Judgment that the respondent took policies of another insurance company, but the same had already lapsed and were not in force at the time when the policy of petitioner-company was taken. Unless the petitioner had pleaded and proved that the lapsed policies were later on revived, the non-disclosure of previous policies as observed by the High Court would be of no avail. We agree with that view." (Emphasis added)

22. For the aforesaid reasons, we are of the view that repudiation of the Complainant's claim by the Opposite Party(ies)/Insurer(s) on the ground that the life assured had suppressed about existence of his previous Insurance Policies was entirely incorrect and uncalled for.

23. Consequently, the Complaint is allowed and the Opposite Parties are directed to pay the insured amount to the Complainant alongwith interest @ 6% p.a. from the date of filing of the present Complaint, within two months from the date of this Order, alongwith an additional amount of Rs. 50,000/- as litigation costs.

24. In case of non-compliance of this Order within the directed time, the interest rate shall be enhanced to 8% p.a. for any outstanding amount(s).

25. Pending application(s), if any, also stand disposed off as having been rendered infructuous.