State Consumer Disputes Redressal Commission
Reliance Nippon Life Insurance Company ... vs Aruna Sachdeva on 6 January, 2026
1
STATE CONSUMER DISPUTES REDRESSAL COMMISSION
U.T., CHANDIGARH
[ADDITIONAL BENCH]
Appeal No. : 287 of 2025
Date of Institution : 13.10.2025
Date of Decision : 06.01.2026
1] Reliance Nippon Life Insurance Company Limited, Reliance Centre,
401-B to 404, 4th Floor, Inspire BKC, G-Block, BKC Main Road,
Bandra Kurla Complex, Bandra (East), Mumbai - 400051
2] Reliance Nippon Life Insurance Company Limited, SCO 123, 2nd Floor,
Sector 17-C, Chandigarh - 160017, both through their authorized
signatory/Manager Legal Mr. Animesh Mishra, Chief Manager Legal,
Reliance Nippon Life Insurance Company Limited, available at Unit
No.401-B, 402, 403 & 404, 4th Floor, Inspire BKC, G-Block, BKC Main
Road, Bandra Kurla Complex, Bandra East, Mumbai - 400051
......Appellants/Opposite Parties
Versus
1] Aruna Sachdeva W/o Mr. Harshana Domun, R/o H.No.245, Sector
37-A, Chandigarh
2] Ira Domun D/o Mr. Harshana Domun, R/o H.No.1208 A, Sector 32,
GMCH Doctors' Flats, Chandigarh
.....Respondents/Complainants
BEFORE: MRS. PADMA PANDEY, PRESIDING MEMBER
MR. RAJESH K. ARYA, MEMBER Argued by:
Sh. Gaurav Bhardwaj alongwith Sh. Sanjeev Goyal, Advocates for the appellants Ms. Aruna Sachdeva, Advocate, respondent No.1 in person as well as on behalf of respondent No.2 PER PADMA PANDEY, PRESIDING MEMBER The instant appeal has been filed by the opposite parties - Reliance Nippon Life Insurance Private Limited (appellants herein) seeking setting aside of dated 01.07.2025 passed by the District Consumer Disputes 2 Redressal Commission-I, U.T., Chandigarh, whereby the consumer complaint filed by the complainants (respondents herein) bearing No.5 of 2025 has been partly allowed by granting following relief:-
"4. In the light of the aforesaid discussion, the consumer complaint succeeds and the same is hereby partly allowed and OPs are directed as under :-
(i) to refund the entire premium amounts i.e. Rs.9,29,669/- to the complainants alongwith interest @ 9% per annum from the date of its deposit onwards.
(ii) to pay an amount of ₹10,000/- to the complainants as compensation for causing mental agony and harassment;
(iii) to pay ₹10,000/- to the complainants as costs of litigation.
5. This order be complied with by the OPs within thirty days from the date of receipt of its certified copy, failing which, the payable amounts, mentioned at Sr.No.(i) & (ii) above, shall carry interest @ 12% per annum from the date of this order, till realization, apart from compliance of direction at Sr.No.(iii) above."
2. It was the case of the complainants (respondents herein) before the District Commission that on 20.03.2021, the husband of complainant No.1 and father of complainant No.2, namely Sh. Harshanan Domun (policy holder/proposer), took policy No.53715352 from the opposite parties by paying a premium of ₹1,59,900/- and thereafter paid two more premiums till March 2024, depositing a total sum of ₹3,18,000/-. Similarly, on 20.03.2021, he obtained policy No.53912661 by paying a premium of ₹2,09,000/- and thereafter paid three premiums till March 2024, depositing a total amount of ₹6,27,000/-. Unfortunately, the policy holder expired on 26.04.2024, leaving behind the complainants as his legal heirs. Thereafter, complainant No.1 approached the opposite parties for settlement of the death claim and was informed that as per the policy, she was entitled only to the surrender value of ₹1,60,000/- on submission of requisite documents. No official could explain the antecedents of the plans taken and the policy documents were written in micro handwriting, deliberately concealing important information. It was stated that in Para 13 of the policy details, 3 under family history, the agent had wrongly ticked "No" to the query regarding parents suffering from heart attack or diabetes, whereas the mother of the complainant had an autoimmune disease. It was further stated that the common proposal form showed that the opposite parties, through their agent, filled incorrect information regarding the source of funds and the meeting of the policy holder with the sales advisor. It was further stated that the opposite parties also failed to get the policy holder medically examined and furnished incorrect information in the documents, thereby mis-selling the policies. The complainants sent a legal notice to the opposite parties but to no effect. As the opposite parties failed to refund the premium amounts or settle the claim after the demise of the policy holder, it was alleged that their act amounted to deficiency in service and unfair trade practice. Despite repeated requests, the opposite parties did not admit the claim.
3. On the other hand, the opposite parties (appellants herein), while resisting the consumer complaint by filing their written version before the District Commission, pleaded that the policies were issued on the basis of information furnished by the proposer/life assured in the duly executed proposal form and were accompanied by terms and conditions. It was further stated that policy No.53715352 was issued during the Covid period, when physical dispatch was exempted and hence, the policy document was sent through email, while the other policy was sent by speed post. It was further stated that the complainants did not exercise the free look option within 15 days for cancellation or modification. It was further stated that since the proposer paid premiums for three consecutive years and thereafter stopped payment, the policies became paid-up and acquired surrender value as per policy terms. Rest of the averments/allegations were denied being wrong.
4. The complainants filed rejoinder before the District Commission wherein they reiterated the averments in their complaint and repudiated those as stated in the written version of the opposite parties.
5. The parties led evidence in support of their respective cases before the District Commission.
46. After considering the rival contentions of the parties and going through the material available on record, the District Commission partly allowed the complaint as stated above.
7. The order of the District Commission has been assailed by the appellants on the ground that the District Commission erred in holding that the policy was mis-sold to the deceased Harshanan Domun, as the said finding is contrary to the evidence on record. It has been stated that the policy was proposed by the deceased after understanding the plan and the terms and conditions, and the proposer/life assured duly signed the customer declaration in English, admitting the contents to be correct. It has further been stated that the proposal form clearly records that all terms, conditions, risks and benefits were explained and understood, leaving no scope for misrepresentation by the appellants. In view of the settled law laid down by the Hon'ble Supreme Court in Grasim Industries Ltd. vs. Agarwal Steel, 2009 (4) CCC 598 (SC) and by the Hon'ble State Commission, Punjab in Aviva Life Insurance Co. Ltd. vs. Jasmail Singh, Appal No.880 of 2014 decided on 02.02.2016, a presumption arises that a person signing a document has understood it unless proved otherwise.
8. It has further been stated that the District Commission further wrongly observed that the source of funds was inconsistently mentioned in the two policies, thereby concluding that the proposal forms were not filled by the proposer. It has further been stated that this finding is illegal and contrary to the pleadings and evidence, as policy No. 53715352 was proposed in May 2020 and policy No. 53912661 in March 2021, with a gap of about 10 months. During this period, the proposer could have been a pensioner at the time of the first policy with a lower premium of ₹1,05,000/- and subsequently engaged in business at the time of the second policy with a higher premium of ₹2,09,000/-. It has further been stated that the source of funds and premium payment were never disputed by the complainants. It has further been stated that complainant No.1, being the life assured in the first policy, had declared her annual income as ₹2,40,000/-, making the household income sufficient, a fact ignored by the District Commission. Moreover, the policy was duly received by the proposer, who did not exercise 5 the free look option for cancellation or modification under Section 6(2) of IRDA (Protection of Policyholders' Interests) Regulations, 2002, thereby accepting the terms and conditions.
9. It has further been stated that the District Commission failed to appreciate that policy No. 53725352 was issued on 22.05.2020 and policy No. 53912661 on 31.03.2021, and the proposer paid three annual premiums under each policy without raising any objection or grievance during his lifetime, which clearly negatives the allegation of mis-selling. It has further been stated that the proposer never lodged any complaint and continued paying premiums without protest, demonstrating acceptance of the policies. Further, the Commission overlooked that the consumer complaint filed in January 2025 is hopelessly barred by limitation, as the cause of action arose on the date of issuance/receipt of the policy documents in 2020-2021. It has further been stated that in view of Section 24A of the Consumer Protection Act and the law laid down by the Hon'ble Supreme Court in V.N. Shrikhande vs. Anita Sena Fernandes, 2011 (1) CLT 262, Kandimalla Raghavaiah & Co. vs. National Insurance Co. Ltd., 2009 (3) CPJ 75 (SC), and State Bank of India vs. M/s B.S. Agricultural Industries (I), 2009 (2) RCR (Civil) 628 (SC), mere correspondence does not extend limitation. It has further been stated that since the issue of limitation was not considered, the impugned order is illegal and liable to be set aside.
10. It has further been stated that the District Commission wrongly and illegally ordered the appellant to pay the amount of premium alongwith interest @9% per annum whereas under policy No.53715352, three premiums amounting to ₹3,11,669/- has been deposited and under policy No.53912661, three premiums amounting to ₹6,12,000/- has been deposited and the policies would acquire a surrender value, therefore, amount if any the same is strictly payable as per terms and conditions of the policy.
11. It has further been stated that the District Commission failed to appreciate that the insurance contract between the parties is strictly governed by the terms and conditions of the policy. It has further been stated that the Hon'ble Supreme Court in Export Credit Guarantee 6 Corporation of India Ltd. vs. M/s Garg Sons International, 2013 (1) CPC 192, held that courts must give paramount importance to the terms of the insurance contract and construe them strictly to determine the insurer's liability. It has further been stated that similar views were reiterated in Vikram Greentech (I) Ltd. & Anr. vs. New India Assurance Co. Ltd., 2009 (4) CLT 313, and Deokar Exports Pvt. Ltd. vs. New India Assurance Co. Ltd., 2009 (2) CLT 15, holding that no exception or relaxation can be made on equitable grounds. It has further been stated that the Hon'ble National Commission in LIC of India & Ors. vs. Mahendra Singh, 2011 (4) CLT 39, further held that policy terms, being contractual in nature, must be interpreted strictly as expressed. It has further been stated that the impugned order, having ignored these settled principles, is liable to be set aside.
12. On the other hand, on behalf of the respondents/complainants, it has been stated that the deceased Harshanan Domun obtained two policies bearing Nos. 53715352 and 53912661 on 20.03.2021 through the same agent, paid multiple premiums and expired on 26.04.2024, whereafter serious irregularities came to light. It has further been stated that the deceased, a brain-stroke patient since 2012, was falsely shown as a businessman, was never medically examined and was exploited by agents who concealed material facts and fabricated documents to earn commission. It has further been stated that the life assured (complainant No.2) was neither informed nor gave consent, never met the sales advisor and never signed any proposal or acceptance form; her alleged signatures, height, weight and role as proposer shown in documents are stated to be forged, contradictory and unreliable. It has further been stated that the appellants deliberately bypassed mandatory medical and consent requirements, misused the illness of the deceased and indulged in unfair trade practice. The respondents have placed reliance on Star Health & Insurance Co. vs. Kulwinder Singh (FA No.108/2023 decided by Punjab State Commission), Max Life Insurance Co. vs. Sh. Bihari Lal (FA No.273/2024 decided by Chandigarh State Commission on 30.07.2024) and that of Hon'ble Apex Court in case titled Pioneer Urban Land & Infrastructure Ltd. vs. Govindan 7 Raghavan (CA No.12238/2018), to contend that unfair contracts and unequal bargaining cannot be enforced. It has further been stated that the complaint was within limitation as the cause of action arose only after the death of the policyholder on 26.04.2024, followed by a legal notice dated 14.08.2024 and filing of the complaint in January 2025. It has further been stated that the District Commission, after appreciating the material on record, rightly allowed the complaint of the respondents/complainants. Lastly prayer for dismissal of the appeal has been made.
13. After hearing the Counsels for the parties and going through the material available on record, the impugned order and the written arguments of the respondents/complainants, we are of the considered view that this appeal filed by the appellants is liable to be dismissed for the reasons to be recorded hereinafter.
14. The principal contention of the appellants is that the District Commission erred in holding that the policies were mis-sold to the deceased policyholder as the deceased had voluntarily signed the proposal forms after understanding the terms and conditions of the policies. It has been contended that once the proposer signed the declaration in English, a presumption arises that the Life Assured understood the contents thereof. This contention, though attractive at first blush, does not withstand closer scrutiny. The District Commission has rightly held that mis-selling is not confined merely to the act of obtaining signatures but includes misrepresentation, suppression of material facts, manipulation of proposal documents and exploitation of unequal bargaining power. In the present case, the material on record unmistakably reveals glaring inconsistencies in the proposal documents, particularly with respect to the source of income of the proposer, the role of the life assured, the medical and personal antecedents and contradictory disclosures in two proposal forms allegedly filled by the same proposer. Such contradictions could not have reasonably emanated from a single individual acting with full understanding and free volition. The appellants failed to produce any cogent or convincing evidence to establish that the proposer himself filled the proposal forms or that the contents were explained to him in a meaningful manner. The judgment of 8 Hon'ble Apex Court in Lucknow Development Authority Vs. M.K.Gupta, III (1993)CPJ 7(SC) fully support the approach adopted by the District Commission and reinforce the consumer-centric interpretation of the law.
15. The reliance placed by the appellants on Grasim Industries Ltd. vs. Agarwal Steel, 2009 (4) CCC 598 (SC), is clearly misplaced. While the said judgment lays down a general presumption regarding understanding of documents signed, it equally recognizes that such presumption is rebuttable. In the present case, the presumption stands effectively rebutted by documentary inconsistencies, surrounding circumstances and unrebutted evidence led by the complainants. Accordingly, the finding of mis-selling recorded by the District Commission cannot be faulted.
16. The appellants attempted to justify the contradictory disclosures regarding the source of income by contending that the proposer may have been a pensioner at one point of time and later became a businessman. This explanation, in our view, is a mere afterthought and does not inspire confidence. The District Commission has rightly observed that two contradictory proposal forms, each purporting to represent the same proposer, conclusively demonstrate that the forms were not filled by the proposer himself but by the agents of the appellants. Significantly, no documentary evidence whatsoever was produced by the appellants to establish any change in occupation of the proposer between the relevant periods.
17. More importantly, the appellants did not rebut the specific plea of the complainants that the deceased was a brain-stroke patient since 2012, which seriously impaired his cognitive and decision-making abilities. In such circumstances, casual and speculative explanations regarding change of income cannot dislodge a finding based on objective documentary discrepancies. We therefore find no error in the District Commission's conclusion that such inconsistencies are indicative of mis-selling and manipulation of proposal documents.
18. The appellants further argued that since the proposer paid premiums for three consecutive years without raising any objection, the allegation of mis-selling is rendered untenable. We are unable to accept this 9 contention. It is now well settled that mis-selling in insurance matters often surfaces only at the time of claim, when the insured or beneficiaries realize that the policy does not operate in the manner represented. The mere fact that premiums were paid without protest cannot validate a contract that was vitiated at inception by misrepresentation and unfair trade practice. Further, the deceased never lodged any complaint during his lifetime does not absolve the appellants, especially when the respondents/complainants have successfully established that the deceased was suffering from a serious neurological ailment affecting his comprehension. The appellants failed to adduce any evidence to rebut this crucial aspect. In our view, it is justified to hold that that continued payment of premiums does not negate mis- selling.
19. The plea of limitation raised by the appellants is wholly misconceived and devoid of merit. The appellants have contended that the cause of action arose on the date of issuance of the policies in 2020-2021 and that the complaint filed in January 2025 was barred by limitation. This argument ignores the settled principle that in cases involving latent fraud and misrepresentation, the cause of action arises when the aggrieved party first acquires knowledge of the wrongdoing. In the present case, the complainants became aware of the alleged fabrication of documents and mis-selling only after the death of the policyholder on 26.04.2024, when the claim was repudiated. The complaint was filed in January 2025, well within the statutory period as prescribed by Consumer Protection Act 2019. The judgments relied upon by the appellants, including V.N. Shrikhande vs. Anita Sena Fernandes (supra), are clearly distinguishable on facts.
20. The appellants have further contended that the proposer did not exercise the free look option and therefore accepted the policy terms. This contention is equally unsustainable. The free look provision presupposes informed consent, proper disclosure and valid execution of documents. In the present case, the respondents have convincingly established that the life assured was never informed about the policy, her consent was never obtained and her alleged signatures, height, weight and other particulars 10 were fabricated. In such circumstances, failure to exercise the free look option cannot be used as a defence to justify unfair trade practice.
21. The appellants have further asserted that medical examination of the proposer was not mandatory. This plea is belied by the material on record. The deceased was admittedly above 45 years of age and suffering from a brain stroke since 2012. Despite this, no medical examination was conducted. The failure to conduct medical examination, despite knowledge of serious illness, demonstrates gross negligence and unfair conduct on the part of the appellants. The reliance placed by the respondents on Star Health & Insurance Co. vs. Kulwinder Singh (supra) and Max Life Insurance Co. vs. Bihari Lal (supra) squarely supports the District Commission's finding.
22. While the proposition that insurance contracts are governed by their terms is well settled, such principle cannot be invoked to enforce a contract obtained through misrepresentation and unequal bargaining power. The Hon'ble Supreme Court in Pioneer Urban Land & Infrastructure Ltd. vs. Govindan Raghavan (supra) has categorically held that unfair and unreasonable contracts cannot be enforced merely because they are reduced to writing. Once mis-selling and unfair trade practice is established, strict construction of policy terms cannot rescue the insurer. This settled legal position is squarely applicable in the instant case.
23. The direction to refund premiums with interest @9% per annum is neither arbitrary nor excessive. Once the policies were found to be vitiated by mis-selling and unfair trade practice, the appellants cannot insist upon application of surrender value clauses. Restitution is the natural consequence of a voidable contract and the District Commission has exercised its discretion judiciously. No perversity or illegality is discernible in this direction.
24. It may be stated here that recently, the Hon'ble National Consumer Disputes Redressal Commission, New Delhi vide order dated 07.11.2025 has decided a bunch of 25 Second Appeals filed by Reliance Nippon Life Insurance Company Limited & Anr. (appellants therein), the lead case that of Rattan Chauhan (respondent therein) i.e. Second Appeal No.75 11 of 2025, against common order dated 28.10.2024 passed by this Commission, under somewhat similar facts and circumstances. Brief facts, involved in the said case were that in the year 2016, the complainant - Rattan Chauhan was approached by agents of the opposite parties with the investment scheme saying that it will yield high profits. Being allured, policy namely "Reliance Nippon Life Fixed Saving Increasing Income Plan" was issued by collecting premium of ₹3,99,999.82. It was assured to the complainant that amount paid in the shape of premium shall be invested like an FD and only three years premium have to be paid. It was the case of the complainant that when he received a notice of renewal premium of the policy, he came to know that in fact the agents of the OP had mis-sold the policy as the said notice indicated policy terms of 24 years and the annual premium of ₹3,99,999.82 was payable for 12 years. The complainant alleged that the opposite parties deliberately misled him to obtain money, despite his age, knowing he could not wait such a long period for the amount which was invested by him under the impression that same will be refunded to him after three years. The complainant requested for refund of the money so deposited but to no avail. Being aggrieved, the Complainant filed a consumer complaint before the District Commission, which was partly allowed by the District Commission vide common order dated 06.10.2023. Being aggrieved, the Opposite Party filed an appeal before this Commission, which was dismissed vide common orders dated 28.10.2024. The Hon'ble National Commission while dismissing all the 25 second appeals held in Para 14 as under:-
"14. We have carefully perused the impugned orders of the State Commission dated 28.10.2024, 29.10.2024 and 30.10.2024 pertaining to the Second Appeals covered under this order, Order(s) of the District Commission, other relevant records and rival contentions of the parties. No doubt, the insurance contract once signed binds both sides and parties to it, including the insurer and insured, are bound by its terms and conditions. In the present case, it has been clearly established that the policy(ies) in question was/were sold under mis-12
representation and without explaining its terms and conditions to the insured. No prudent person could have bought such policy(ies) if its contents and terms and conditions were clearly explained to them. State Commission has at length considered the contentions of the Appellant-Insurance Company and have duly addressed the same. State Commission has passed well reasoned order(s) and we are in agreement with its observations and findings and find no reason to interfere with the same. Contentions of the Appellant-Insurance Company that the complainant(s) are not consumers as they have bought the investment plan and not the insurance policy lacks merit. Complainants have taken a specific plea that copy of the policy was not supplied to them immediately or within the free look out period and they came to know about it only when the next year's premium was demanded. Hence, contentions of the Appellant - Insurance Company that complainants are entitled to surrender benefit only subject to fulfilment of the conditions of the policy which has a minimum 2 years period before they become entitled to surrender value, also lacks merit. There are concurrent findings of both the Fora below regarding deficiency in service and unfair trade practices on the part of the Insurance Company and the fact that the policies were sold under mis-representation. Hence, the insured cannot be bound by the terms and conditions of such policies. After careful consideration of the entire facts and circumstances of the case, we find no error, illegality or material irregularity in the orders of the State Commission. Hence, we uphold the orders of the State Commission dated 28.10.2024, 29.10.2024 and 30.10.2024. Accordingly, all the 25 Second Appeals covered under this order are dismissed."
25. In view of above discussion and the latest judgment of Hon'ble National Commission, the impugned order passed by the District Commission is a well-reasoned, speaking order based on proper 13 appreciation of facts, evidence and settled principles of consumer law. No perversity, illegality or material irregularity has been pointed out by the appellants warranting interference by this Commission. All the grounds raised in appeal are devoid of merit and are hereby rejected.
26. For the reasons recorded above, this appeal is dismissed with no order as to costs. The order dated 01.07.2025 passed by the District Consumer Disputes Redressal Commission-I, U.T., Chandigarh is upheld in toto.
27. Certified copies of this order be sent to the parties free of charge forthwith.
28. A copy of this order be also sent to the District Commission concerned.
29. File be consigned to Record Room after completion. Pronounced 06.01.2026 (PADMA PANDEY) PRESIDING MEMBER (RAJESH K. ARYA) MEMBER Ad 14