State Consumer Disputes Redressal Commission
Max Life Insurance Company Ltd vs Smti Purnima Banerjee on 24 November, 2025
STATE CONSUMER DISPUTES REDRESSAL COMMISSION
MEGHALAYA
FIRST APPEAL NO. SC/17/A/2/2024
Max Life Insurance Company Ltd
PRESENT ADDRESS - 90-A, Sector-18, Udyog Vihar, Gurugram-122015,
Haryana,MEGHALAYA.
.......Appellant(s)
Versus
Smti Purnima Banerjee
PRESENT ADDRESS - R/o Manjari, House No-11/23, Kenches Trace, Laban Last Stop, Shillong-
793004, Meghalaya,MEGHALAYA.
.......Respondent(s)
BEFORE:
HON'BLE MR. JUSTICE SHIVAJI PANDEY , PRESIDENT
HON'BLE DR. GRACIE BELL MOORE MIHSILL , MEMBER
HON'BLE MR. MAJOR UNSAM NONGSIEJ , MEMBER
FOR THE APPELLANT:
SHRI. R. KHARKRANG
FOR THE RESPONDENT:
SMTI. S. SHYAM
DATED: 24/11/2025
ORDER
In the present appeal, the appellant, namely, Max Life Insurance Company Ltd. is challenging the order dated 25.04.2024 passed in Complaint Case No.09 of 2023 by the District Consumer Redressal Commission, East Khasi Hills, Meghalaya Shillong (hereinafter referred to as the 'District Consumer Forum'), whereby and whereunder the District Consumer Forum has awarded to the complainant/respondent herein an assured amount of Rs.50 lacs along with Rs. 1 lac for compensation and Rs.50,000/- for litigation charges as well as additional amount of Rs.50,000/- for mental agony and harassment. In total, Rs. 52 lacs has been directed by the District Consumer Forum to be paid to the complainant/respondent herein, namely, Smt. Purnima Banerjee within 45 days from the date of receipt/production of a certified copy of the order, failing which the complaint, namely, Smt. Purnima Banerjee would be entitled for the interest @ 12% per annum.
2. The case in hand is that the husband of Purnima Banerjee (complainant), namely, late Arunangshu Banerjee, who was resident of Shillong, Maghalaya, died on 02.08.2020 at North Eastern Indira Gandhi Regional Institute of Health and Medical Sciences (NEIGRIMS), Shillong. The story goes in the manner that the husband of the complainant purchased a Term Life Insurance Policy of Max Life Insurance and after medical test at the assigned hospital chosen by Max Life Insurance and on satisfactory medical evaluation by the assigned hospital of the condition of the health of the husband of the complainant, the proposal for the said policy was accepted and, accordingly, the sale policy/ coverage of the husband of the complainant was issued on 16.04.2019 and the husband of the complainant started making payment of premium till the date of his death on 02.08.2020. The complainant is the sole nominee of insurance Policy bearing No.560022717. The complainant, after completion of last rites of her husband and after receiving the relevant documents required for claim by Max Life Insurance from the NEIGRIHMS, sent an intimation of the death of her husband to Max Life Insurance and also made claim of insurance of assured amount of Rs.50 lacs via E-mail id [email protected]. Thereafter, her claim was rejected on the ground that on evaluation of the claim, it was found by the Max Life Insurance that the husband of the complainant was chronic diabetic and further he had not disclosed in the proposal form his previous insurance policies to Max Life Insurance prior to signing the proposal form, which is nothing but suppression of material facts. There are/were two grounds for repudiation of claim, i.e., suppression of medical history of assured and second one is non-disclosure of earlier insurance policy in the proposal form.
3. The complainant/respondent herein has claimed that her husband was not diabetic at the time of purchasing the policy and, as such, there was no question of non- disclosure of medical details in the proposal form. It has further been claimed that her husband was examined by the hospital/clinic of the choice of Max Life Insurance Company. It has further been claimed that the medical report reflects that his sugar levels were normal, so the question of suffering from deceased of diabetes did not arise and the allegation that her husband was diabetic is completely incorrect and after being satisfied with the report, the Max Life Insurance Company has accepted the proposal and assured her late husband.
4. Further, it has been stated that the husband had purchased the insurance policy, which was merely an investment plan/pension plan of Bajaj Allianz and pension plan from the HDFC Life has already lapsed. In fact, the above-mentioned policies were/are not the insurance policies having no direct bearing on declaration made by the husband of the complainant about the previous insurance policies.
5. It has further been claimed that order of repudiation is non-est and based on no material and, as such, the claimant is entitled to insure amount along with compensation.
6. It has further been stated that the Max Life Insurance Company, after exchange of communications vide E-mails starting from 23.09.2020, sent an E-mail only on 02.12.2022 attaching the order of rejection of claim application dated 22.02.2022. It appears that firstly there is delay of two years, one month and twenty four days in sending a decision of the claim of the complainant and secondly, sending such communication after ten months itself shows that the action of the Max Life Insurance Company suffers from illegality.
7. It has further been claimed that the order dated 22.02.2022 is ante-dated and even more dubious on the facts that the Max Life Insurance Company asked the complainant for documents regarding 'previous policies' on 22.08.2022, i.e., six months after the order of rejection of the claim.
8. It has further been said that the Max Life Insurance Company vide notice dated 09.03.2022 asked the complainant to provide the details of medical treatment papers, whereas, the record shows that the Max Life Insurance Company has rejected the claim on 22.02.2022.
9. The District Consumer Forum has given finding in favour of complainant on both issues, first previous ailment of Kidney and second one is that he had already purchased the life insurance as the husband of the complainant while filling up the proposal form mentioned that he has no previous problem of kidney as also not mentioned of previous insurance purchased by the husband of the complainant. On analysis of facts, on both issues, the District Consumer Forum arrived to finding that the husband of the complainant, while filling the proposal form,was not suffering from any kidney problem and further held that both the insurance plans are/were investment plan and not life insurance and directed for payment of an amount of Rs. 52 lacs.
10. It is well known principle of Insurance Law that when an assured fill up the proposal form, he must disclose the required/desired information sought by the Company and suppression of the same will dis-entitle the claimant of the assured amount as the contract of the insurance is based upon the principle of contracts uberrima fides means material good faith between persons in a particular relationship, it is based on the principle of trust and transparently, thereby that the every fact must be disclosed, otherwise, there is a good ground for repudiation of the contract. It is also required that a duty of disclosure of material facts would continue right up to the conclusion of the contract. If there is any misstatement and suppression of material facts, the policy can be called into question and while determining the issue whether there has been suppression of any material facts, it would be required to also examine whether it is under the exclusive personal knowledge of the person intending to take the policy and it could not be ascertained by reasonable enquiry by a prudent person. This principle has been adumbrated by different judgments of the Hon'ble Supreme Court, such as, in the case of Reliance Life Insurance Company Limited & Anr. vs. Rekhaben Nareshbhai Rathod, reported in (2019) 6 SCC 175. It would be relevant to quote paragraphs 16, 17, 18, 19, 21 & 22 from the said judgment :-
"16. The fundamental principle is that insurance is governed by the doctrine of uberrima fidei. This postulates that there must be complete good faith on the part of the insured. This principle has been formulated in MacGillivray on Insurance Law [ 12th Edn., Sweet and Maxwell (2012).] succinctly, thus:
"[Subject to certain qualifications considered below], the assured must disclose to the insurer all facts material to an insurer's appraisal of the risk which are known or deemed to be known by the assured but neither known or deemed to be known by the insurer. Breach of this duty by the assured entitles the insurer to avoid the contract of insurance so long as he can show that the non-disclosure induced the making of the contract on the relevant terms...."
The relationship between an insurer and the insured is recognised as one where mutual obligations of trust and good faith are paramount.
17. In Condogianis [Condogianis v. Guardian Assurance Co. Ltd., 1921 SCC OnLine PC 39 : (1921) 2 AC 125 : AIR 1921 PC 195] , the Privy Council dealt with an appeal by special leave from a judgment [Guardian Assurance Co. Ltd. v. Condogianis, (1919) 26 CLR 231] of the High Court of Australia. The appellant had claimed a declaration under a policy of insurance that the insurer was liable to pay him for a loss sustained as a consequence of a fire. In response to the requirement of disclosing whether the proponent had ever been a claimant of a fire insurance company in respect of the property proposed or any other property, the insurer had disclosed one claim which had been made in the past but omitted to disclose another, in respect of the burning of a motor car. The terms of the declaration were as follows : (SCC OnLine PC para 5) "5. ... 'This proposal is the basis of the contract and is to be taken as part of the policy and (if accepted) the particulars are to be deemed express and continuing warranties furnished by or on behalf of the proponent; and any questions remaining unanswered will be deemed to be replied to in the negative. The proposal is made subject to the Company's conditions as printed any/or written in the policy to be issued hereon, and which are hereby accepted by the proponent.'"
Lord Justice Shaw, speaking for the Privy Council held : (SCC OnLine PC para 6)
"6. The case accordingly is one of express warranty : If in point of fact the answer is untrue, the warranty still holds, notwithstanding that the untruth might have arisen inadvertently and without any kind of fraud. Secondly, the materiality of the untruth is not in issue; the parties having settled for themselves--by making the fact the basis of the contract, and giving a warranty--that as between them their agreement on that subject precluded all inquiry into the issue of materiality. In the language of Lord Eldon in Newcastle Fire Insurance Co. v. Macmorran & Co. [Newcastle Fire Insurance Co. v. Macmorran & Co., (1815) 3 Dow PC 255 : 3 ER 1057] (ER p. 1060) '... it is a first principle in the law of insurance, on all occasions, that where a representation is material it must be complied with--if immaterial, that immateriality may be inquired into and shown; but that if there is a warranty it is part of the contract that the matter is such as it is represented to be. Therefore the materiality or immateriality signifies nothing.'"
18. This principle was followed by the Bombay High Court in Lakshmishankar Kanji Rawal v. Gresham Life Assurance Society [Lakshmishankar Kanji Rawal v. Gresham Life Assurance Society, 1932 SCC OnLine Bom 107 : AIR 1932 Bom
582. Also see Great Eastern Life Assurance Co. Ltd. v. Bai Hira, 1930 SCC OnLine Bom 35 : ILR (1931) 55 Bom 124] where it was held : (SCC OnLine Bom para 2) "2. ... where the representations, statement and agreements made by an assured in his application for a policy of life assurance are made a basic condition of the contract by the policy of life assurance, the truth of the statements contained in the proposal are, apart from the question of their materiality, the condition of the liability of the assurance company. It would therefore follow that the defendant company was entitled to repudiate its liability on account of the untrue statement contained in the proposal form and in the examination by the medical examiner."
19. In Sheoshankar [Sheoshankar Ratanlalji Khamele v. LIC, 1970 SCC OnLine Bom 117 : AIR 1971 Bom 304] , a Division Bench of the Bombay High Court noted : (SCC OnLine Bom para 12) "12. The law with respect to insurance previously was that any misstatement on the part of the assured while making the proposal or at any stage thereafter avoided the contract of policy and the insurer was not liable for the claim on such policy. In Condogianis v. Guardian Assurance Co. Ltd. [Condogianis v. Guardian Assurance Co. Ltd., 1921 SCC OnLine PC 39 : (1921) 2 AC 125 : AIR 1921 PC 195] , their Lordships pointed out that if in point of fact the answer is untrue, the warranty still holds, notwithstanding that the untruth might have arisen inadvertently and without any kind of fraud. Secondly, the materiality of the untruth is not in issue; the parties having settled for themselves--by making the fact the basis of contract and giving warranty--that as between them their agreement on that subject precluded all inquiry into the issue of materiality."
The High Court observed that the law of insurance had, however, undergone a material change by the enactment of Section 45 of the Insurance Act, 1938. Explaining the provisions of Section 45, the High Court held : (SCC OnLine Bom para 14) "14. ... The section is divided into two parts. Under the first part, if the insurer calls in question the policy within a period of two years from the date on which it was effected, then the insurer company has only to show that a statement made in the proposal for insurance, or in any report of a medical officer, or referee, or friend of the insured, or in any other document, leading to the issue of the policy was inaccurate or false. Even an incorrect statement which may not be on a material fact and suppression of fact which may not be on a material point, would be enough for the insurer company to avoid the contract of policy under this part. Under the second part, where a period of two years expired after the date of policy was effected without any challenge to it by the insurer, the insurer could call it in question only on showing that such statement by the insured was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the policy-holder and that the policy-holder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose. The question as to the date on which the policy could be said to be effected and the date on which the proposal can be said to have been accepted assumes importance in this case as on the determination of this question will depend whether the repudiation by the insurer has been within two years or after a period of two years from the date on which the policy was effected."
21. In LIC v. G.M. Channabasamma [LIC v. G.M. Channabasamma, (1991) 1 SCC 357] , a two-Judge Bench of this Court held : (SCC pp. 359-60, para 7) "7. ... It is well settled that a contract of insurance is contract uberrima fides and there must be complete good faith on the part of the assured. The assured is thus under a solemn obligation to make full disclosure of material facts which may be relevant for the insurer to take into account while deciding whether the proposal should be accepted or not. While making a disclosure of the relevant facts, the duty of the insured to state them correctly cannot be diluted. Section 45 of the Act has made special provisions for a life insurance policy if it is called in question by the insurer after the expiry of two years from the date on which it was effected. Having regard to the facts of the present case, the learned counsel for the parties have rightly stated that this distinction is not material in the present appeal. If the allegations of fact made on behalf of the appellant Company are found to be correct, all the three conditions mentioned in the section and discussed in Mithoolal Nayak v. LIC [Mithoolal Nayak v. LIC, 1962 Supp (2) SCR 571 : AIR 1962 SC 814 : (1962) 32 Comp Cas 177] must be held to have been satisfied."
22. The decision of this Court in LIC v. Asha Goel [LIC v. Asha Goel, (2001) 2 SCC 160] considered a situation in which a claim under a life insurance policy was repudiated on the ground that the insured suppressed facts pertaining to the condition of health. The Single Judge of the High Court held [Asha Goel v. LIC, 1985 SCC OnLine Bom 210 : AIR 1986 Bom 412] that a writ petition under Article 226 could be maintained against Life Insurance Corporation and that the insurer had failed to discharge its burden under Section 45 of the Insurance Act, 1932. A Division Bench of the High Court held in appeal that there was some substance in the complaint that the insurer ought to have been given an opportunity to lead evidence to discharge the onus of justifying the rejection. The matter was accordingly remanded. The insurer then moved to this Court challenging the maintainability of a writ petition under Article 226 of the Constitution before the High Court. This Court held that where a dispute in regard to a repudiation of a claim raises a serious matter requiring oral and documentary evidence, the appropriate remedy would be a civil suit and not a writ petition. After elaborating the requirements of Section 45, this Court held : (SCC p. 168, para 12) "12. ... The contracts of insurance including the contract of life assurance are contracts uberrima fides and every fact of material (sic material fact) must be disclosed, otherwise, there is good ground for rescission of the contract. The duty to disclose material facts continues right up to the conclusion of the contract and also implies any material alteration in the character of the risk which may take place between the proposal and its acceptance. If there are any misstatements or suppression of material facts, the policy can be called into question. For determination of the question whether there has been suppression of any material facts it may be necessary to also examine whether the suppression relates to a fact which is in the exclusive knowledge of the person intending to take the policy and it could not be ascertained by reasonable enquiry by a prudent person."
11. Another judgment on this line is the judgment of the Hon'ble Supreme Court in the case of Branch Manager, Bajaj Allianz Life Insurance Company Ltd. & Ors. vs. Dallbir Kaur, (2021) 13 SCC 553. It would be relevant to quote paragraphs 7, 8, 9, & 12 from the said judgment :-
"7. A contract of insurance is one of utmost good faith. A proposer who seeks to obtain a policy of life insurance is duty-bound to disclose all material facts bearing upon the issue as to whether the insurer would consider it appropriate to assume the risk which is proposed. It is with this principle in view that the proposal form requires a specific disclosure of pre-existing ailments, so as to enable the insurer to arrive at a considered decision based on the actuarial risk. In the present case, as we have indicated, the proposer failed to disclose the vomiting of blood which had taken place barely a month prior to the issuance of the policy of insurance and of the hospitalisation which had been occasioned as a consequence. The investigation by the insurer indicated that the assured was suffering from a pre-existing ailment, consequent upon alcohol abuse and that the facts which were in the knowledge of the proposer had not been disclosed. This brings the ground for repudiation squarely within the principles which have been formulated by this Court in the decisions to which a reference has been made earlier.
8. In LIC v. Asha Goel [LIC v. Asha Goel, (2001) 2 SCC 160] , this Court held : (SCC p. 168, para 12)
"12. ... The contracts of insurance including the contract of life assurance are contracts uberrima fides and every fact of material (sic material fact) must be disclosed, otherwise, there is good ground for rescission of the contract. The duty to disclose material facts continues right up to the conclusion of the contract and also implies any material alteration in the character of risk which may take place between the proposal and its acceptance. If there is any misstatements or suppression of material facts, the policy can be called into question. For determination of the question whether there has been suppression of any material facts it may be necessary to also examine whether the suppression relates to a fact which is in the exclusive knowledge of the person intending to take the policy and it could not be ascertained by reasonable enquiry by a prudent person."
9. This has been reiterated in the judgments in P.C. Chacko v. LIC [P.C. Chacko v. LIC, (2008) 1 SCC 321 : (2008) 1 SCC (Civ) 235] and Satwant Kaur Sandhu v. New India Assurance Co. Ltd. [Satwant Kaur Sandhu v. New India Assurance Co. Ltd., (2009) 8 SCC 316 : (2009) 3 SCC (Civ) 366] In Satwant Kaur Sandhu v. New India Assurance Co. Ltd. [Satwant Kaur Sandhu v. New India Assurance Co. Ltd., (2009) 8 SCC 316 : (2009) 3 SCC (Civ) 366] , at the time of obtaining the mediclaim policy, the insured suffered from chronic diabetes and renal failure, but failed to disclose the details of these illnesses in the policy proposal form. Upholding the repudiation of liability by the insurance company, this Court held : (SCC p. 324, para 25) "25. The upshot of the entire discussion is that in a contract of insurance, any fact which would influence the mind of a prudent insurer in deciding whether to accept or not to accept the risk is a "material fact". If the proposer has knowledge of such fact, he is obliged to disclose it particularly while answering questions in the proposal form. Needless to emphasise that any inaccurate answer will entitle the insurer to repudiate his liability because there is clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance."
12. The medical records which have been obtained during the course of the investigation clearly indicate that the deceased was suffering from a serious pre-existing medical condition which was not disclosed to the insurer. In fact, the deceased was hospitalised to undergo treatment for such condition in proximity to the date of his death, which was also not disclosed in spite of the specific queries relating to any ailment, hospitalisation or treatment undergone by the proposer in Column 22 of the policy proposal form. We are, therefore, of the view that the judgment [Bajaj Allianz Life Insurance Co. Ltd. v. Dalbir Kaur, 2020 SCC OnLine NCDRC 463] of Ncdrc in the present case does not lay down the correct principle of law and would have to be set aside. We order accordingly".
12. Another judgment of the Hon'ble Supreme Court is Mahaveer Sharma vs. Exide Life Insurance Company Limited and another, reported in 2025 SCC OnLine SC
435. In this judgment, the Hon'ble Supreme Court has distinguished the judgment given by the Hon'ble Supreme Court in the case of Rekhaben Nareshbhai Rathod (supra) as in this case the assured has disclosed his past purchase of insurance partly but partly he failed to disclose all and the Hon'ble Supreme Court said that the judgment in the case of Rekhaben Nareshbhai Rathod (supra) was the case of complete non-disclosure that is why in that case relief was granted. It would be relevant to quote paragraphs 17, 18 & 19 of the said judgment:-
"17. Applying the aforesaid judgments to the facts of the case, it is noted that the insured had made a substantial disclosure inasmuch as he had disclosed that he had obtained another policy from a private insurer-Aviva for an assured sum of Rs. 4 lakhs (which is actually Rs. 40 lakh) which was in force. Further the queries under Clauses 52 and 53 were with regard to the policies from other insurers "under consideration" and under clause 54 details of "existing insurance cover" had to be mentioned. Evidently, the details of only one insurance cover was mentioned and not about others which were produced by the insurer before the State Commission as Exhibit A-4 to A-6 therein. Thus, there was only a partial disclosure. It is noted that the other policies Exhibit A-4 to A-6 were of inconsequential sum assured amounting to Rs. 2,30,000/- in aggregate whereas the policy disclosed was issued by Aviva was for Rs. 40 lakhs. It is averred in the complaint that the sum assured by Aviva was erroneously mentioned as Rs. 4 Lakhs when it actually was Rs. 40 lakhs whereas in the instant case the sum assured is Rs. 25 lakhs. A copy of the said policy was also submitted to the insurer along with the proposal form.
18. The case at hand involves a slightly different consideration. The father of the appellant had disclosed one other life insurance policy availed by him at the time of filing the proposal form, but failed to disclose other similar policies. While the aforementioned judgment relates to a complete failure to disclose in the peculiar circumstances of two policies being availed of in a short span of time, the present case stands on a different footing of a substantial disclosure which would be sufficient for a prudent insurer to determine the risk assumed. We are of the considered view that such a failure would not influence the decision of a prudent insurer to issue the policy proposed. The policy in question is not a Mediclaim policy; it is a life insurance cover and the death of the deceased has taken place on account of an accident. Accordingly, failure to mention about other policies does not amount to a material fact in relation to the policy availed and consequently, the claim could not have been repudiated by the respondent company.
19. Therefore, we find that in the facts of this case the respondent- insurer decided to issue a policy to the father of the appellant herein even though it was aware that there was another policy for a higher sum assured which was taken by the insured from Aviva. Thus, the insurer was also aware of the fact that the insured had capability and capacity to pay the premium for the policy obtained from Aviva and was confident that the insured had the capacity to pay the premium in respect of the policy which was issued to the insured by the respondent-insurer for a sum lesser assured being Rs. 25 lakh only. Consequently, we find that the repudiation of the policy, in the facts and circumstances of the present case, was improper. Therefore, the appellant herein is entitled to the benefit of the policy which was issued by the respondent herein".
On suppression of previous kidney ailment.
13. During the argument, the appellant could not point out that the husband of the complainant was suffering from any kidney problem, but based upon the record of North Eastern Indira Gandhi Regional Institute of Health and Medical Sciences, Shillong has placed this argument, but the counsel of the appellant failed to give reply that except the report of aforesaid hospital, there was no report from any other hospital disclosing that he had chronic decease of kidney rather the husband of the complainant was examined by the hospital assigned by the Insurance Company. In such view of the matter, this issue goes against the appellant.
On non-disclosure of earlier insurance policy.
14. Now, another issue is to be decided as to whether the husband of the complainant had suppressed the previous purchase of the insurance policy. For that we have to see the statement required to be made in the proposal form by the assured. In column 24 of the proposal form, there is sub-column, such as, "INFORMATION OF LIFE INSURED", which prescribes that "Do you have any Life, Disability, Critical Illness or Health Insurance Policy issued/pending/lapsed with or any other" and the policy holder (husband of the complainant) has given his statement in negative, i.e., "NO", meaning thereby, he has no such health insurance policy under the aforesaid categories.
15. During argument, this Tribunal has asked the counsel for the complainant/opposite party to produce both policy documents; first Bajaj Allianz which the complainant is claiming not a life insurance police, rather it was investment plan and inasmuch as the policy of HDFC Life UNIT-linked Pension Plus.
16. On perusal of policy document of Bajaj Allianz Life Insurance Company, it appears that in clause 'Guaranteed Benefits', it has been mentioned the basic death benefit on the death of the Life assured during the term of the policy. The guaranteed minimum death benefit shall be the basic sum assured. The clause 'Term Cover' stipulates that "In addition to the guaranteed minimum death benefit the policyholder shall receive a guaranteed additional death benefit amount being double the basic sum assured. In case of death the additional death benefit shall be paid in addition to the basic death benefit" and also provides surrender value as 2 years, 3 years, five and six years as well as seven years describing different percentage of the amount. It has been mentioned the manner of payment of premiums, which reads thus :
"i) Premiums are payable on the due dates. However, a grace period of one month nor less than 30 (thirty) days shall be allowed under any circumstances whatsoever. If the death of the Life Assured occurs during the grace period the benefits payable on death under this Policy shall be paid as if the policy was in force for full sum assured after deduction of the premium then due.
ii) Premiums shall be payable on the due dates within the grace period allowed without there being any obligation on the company to notify the Life Assured/Police holder of the due dates. Where the premiums have not been paid on the due dates or even during the grace period, the Policy shall lapse, except those as given in paid up value. Lapsed policies are not entitled for any benefits under the policy".
17. Further, another policy is the HDFC Life where also premium amount term has been mentioned and in what manner, the premium has to be paid has also been mentioned in the HDFC Unit Linked Pension Plus plan.
18. On perusal of both the aforesaid documents, it is clear that the Bajaj Allianz Investment Policy document is nothing but a life insurance because under its heading it has been provided that on the death of the assured, the minimum guaranteed death benefit would be paid of the basic sum assured and also provided the manner of payment of the premium.
19. It has further been argued that in fact the order was passed after three years from the date of issuance of the policy, the Insurance Company repudiated the claim which is barred by Section 45(1) of the Insurance Act, 1938.
20. Now, Section 45 of Insurance Act, 1938 reads as follows :
"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".
21. On perusal of the provision of Section 45 of the Insurance Act, 1938, it is clear that policy of life insurance would not 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.
22. In the present case, insurance coverage was issued as per the record on 16.04.2019, assured died on 02.08.2020 and repudiated the claim on 22.02.2025 which is within three years from the date of commencement of the policy. The order of repudiation dated 22.02.2022 was communicated through E-mail on 02.12.2022. If the order is taken on 22.02.2022, then the order will come within three years, then the claim will not fall be under mischief of Section 45 of the Insurance Act. But if the order is taken on 02.12.2022, which is a communication of the order dated 22.02.2022, in such circumstances, of course, it will beyond three years and Section 45 will apply. But the question is that file which deals with claim of insurance amount has not been called to produce the same nor has been produced. So it is very difficult for this Tribunal to infer that the order of repudiation of claim was not passed on 22.02.2022 rather later on. Even if the order is beyond three years as per the judgment of the Hon'ble Supreme Court, onus would be upon the Insurance Company to prove that information furnished in the proposal form suffers from suppression of material facts. If any particular case is not covered under Section 45 of the Insurance Act, so within three years, the Insurance Company on the proper reason, repudiated the claim and in that event the assured has onus to show that the assigned reason is completely illegal and non- est. But in the event of coverage of Section 45 of the Insurance Act, i.e., not within three years, the onus would shift on the Insurance Company to show that the statement of the information supplied was not correct which would be dehors to the principle of contract of insurance as defined in latein maxim, i.e., uberrima fides.
23. Now, this Tribunal is required to examine the provision of Insurance Regulatory and Development Authority (Protection of Policyholders' Interests) Regulations, 2002. It would be relevant to quote regulations 2 (d) and 4 of the said regulation :
"2. (d) "Proposal form" means a form to be filled in by the proposer for insurance, for furnishing all material information required by the insurer in respect of a risk, in order to enable the insurer to decide whether to accept or decline, to undertake the risk, and in the event of acceptance of the risk, to determine the rates, terms and conditions of a cover to be granted.
Explanation.--"Material" for the purpose of these Regulations shall mean and include all important, essential and relevant information in the context of underwriting the risk to be covered by the insurer."
"4. Proposal for insurance.--(1) Except in cases of a marine insurance cover, where current market practices do not insist on a written proposal form, in all cases, a proposal for grant of a cover, either for life business or for general business, must be evidenced by a written document. It is the duty of an insurer to furnish to the insured free of charge, within 30 days of the acceptance of a proposal, a copy of the proposal form.
(2) Forms and documents used in the grant of cover may, depending upon the circumstances of each case, be made available in languages recognised under the Constitution of India.
(3) In filling the form of proposal, the prospect is to be guided by the provisions of Section 45 of the Act. Any proposal form seeking information for grant of life cover may prominently state therein the requirements of Section 45 of the Act.
(4) Where a proposal form is not used, the insurer shall record the information obtained orally or in writing, and confirm it within a period of 15 days thereof with the proposer and incorporate the information in its cover note or policy. The onus of proof shall rest with the insurer in respect of any information not so recorded, where the insurer claims that the proposer suppressed any material information or provided misleading or false information on any matter material to the grant of a cover."
24. Regulation 2 (d) thereof specifically defines the expression 'proposal form' as a form which is filled by a proposer for insurance to furnish all material information required by the insurer in respect of a risk. The purpose of disclosure is to enable the insurer to decide whether to accept or decline to undertake a risk. The disclosures are also intended to enable the insurer, in the event that the risk is accepted, to determine the rates, terms and conditions on which a cover is to be granted. The Explanation defines the expression "material" to mean and include "all important essential and relevant information" are required for undertaking the risk to be covered by the insurer and the material facts are depending on the surrounding circumstances and the nature of information sought by the insurer. It covers a failure to disclose vital information which the insurer is required in order to determine firstly, whether or not to assume the risk of insurance, and secondly, if it does accept the risk, upon what terms it should do so and also the insurer is better equipped to determine the limits of risk-taking after making assessment on the basis of experienced gained by the company. In a contract of insurance, any fact which would influence the mind of a prudent insurer in deciding whether to accept or not accept the risk is a material fact. The material facts which will be informed what is insurance company is required and not what assured is thinking about facts to be disclosed to the insurance company. The contracts of insurance are governed by the principle of utmost good faith. It would be relevant to quote paragraphs 25, 26, 27, 28 & 29 from the judgment of the Hon'ble Supreme Court in the case of Rekhaben Nareshbhai Rathod (supra) :-
"25. Regulation 2(d) specifically defines the expression "proposal form" as a form which is filled by a proposer for insurance to furnish all material information required by the insurer in respect of a risk. The purpose of the disclosure is to enable the insurer to decide whether to accept or decline to undertake a risk. The disclosures are also intended to enable the insurer, in the event that the risk is accepted, to determine the rates, terms and conditions on which a cover is to be granted. The Explanation defines the expression "material" to mean and include "all important essential and relevant information"
for underwriting the risk to be covered by the insurer. Regulation 4(3) stipulates that while filling up the proposal, the proposer is to be guided by the provisions of Section 45. Where a proposal form is not used, the insurer under Regulation 4(4) is to record the information, confirming it within a stipulated period with the proposer and ought to incorporate the information in the cover note or policy. In respect of information which is not so recorded, the onus of proof lies on the insurer who claims that there was a suppression of material information or that the insured provided misleading or false information on any matter that was material to the grant of the cover.
26. The expression "material" in the context of an insurance policy can be defined as any contingency or event that may have an impact upon the risk appetite or willingness of the insurer to provide insurance cover. In MacGillivray on Insurance Law [ 12th Edn., Sweet and Maxwell (2012). See p. 493 for cases relied upon.] it is observed thus:
"The opinion of the particular assured as to the materiality of a fact will not as a rule be considered, because it follows from the accepted test of materiality that the question is whether a prudent insurer would have considered that any particular circumstance was a material fact and not whether the assured believed it so...."
27. Materiality from the insured's perspective is a relevant factor in determining whether the insurance company should be able to cancel the policy arising out of the fault of the insured. Whether a question concealed is or is it not material is a question of fact. As this Court held in Satwant Kaur [Satwant Kaur Sandhu v. New India Assurance Co. Ltd., (2009) 8 SCC 316 : (2009) 3 SCC (Civ) 366] : (SCC p. 323, para 22) "22. ... Any fact which goes to the root of the contract of insurance and has a bearing on the risk involved would be "material"."
28. Materiality of a fact also depends on the surrounding circumstances and the nature of information sought by the insurer. It covers a failure to disclose vital information which the insurer requires in order to determine firstly, whether or not to assume the risk of insurance, and secondly, if it does accept the risk, upon what terms it should do so. The insurer is better equipped to determine the limits of risk-taking as it deals with the exercise of assessments on a day-to-day basis. In a contract of insurance, any fact which would influence the mind of a prudent insurer in deciding whether to accept or not accept the risk is a material fact. If the proposer has knowledge of such fact, she or he is obliged to disclose it particularly while answering questions in the proposal form. An inaccurate answer will entitle the insurer to repudiate because there is a presumption that information sought in the proposal form is material for the purpose of entering into a contract of insurance.
29. Contracts of insurance are governed by the principle of utmost good faith. The duty of mutual fair dealing requires all parties to a contract to be fair and open with each other to create and maintain trust between them. In a contract of insurance, the insured can be expected to have information of which she/he has knowledge. This justifies a duty of good faith, leading to a positive duty of disclosure. The duty of disclosure in insurance contracts was established in a King's Bench decision in Carter v. Boehm [Carter v. Boehm, (1766) 3 Burr 1905 : 97 ER 1162] , where Lord Mansfield held thus : (ER p. 1164) "Insurance is a contract upon speculation. The special facts, upon which the contingent chance is to be computed, lie most commonly in the knowledge of the insured only; the underwriter trusts to his representation, and proceeds upon confidence that he does not keep back any circumstance in his knowledge, to mislead the underwriter into a belief that the circumstance does not exist, and to induce him to estimate the risque, as if it did not exist."
25. The counsel for the respondent has argued that the provision mentioned in the insurance proposal form is ambiguous in the term of investment policy purchased by the assured from Bajaj Allianz and HDFC Life and in that event interpretation should be construed which beneficial to the insured and for that he has placed reliance on the judgment of the Hon'ble Supreme Court in the case of United India Insurance Co. Ltd. vs. Pushpalaya Printers, reported in (2004) 3 SCC 694. It would be relevant to quote relevant portion of paragraph 6.
"...It is also settled position in law that if there is any ambiguity or a term is capable of two possible interpretations, one beneficial to the insured should be accepted consistent with the purpose for which the policy is taken, namely, to cover the risk on the happening of certain event".
26. In the present case, the fact was quite different as the coverage was for damage caused to the building or machinery on account of bulldozer moving closely on the road was on account of its impact and the Hon'ble Supreme Court said in that context that if there is any ambiguity in the term of proposal form, the benefit will be given to the insured. It is also reiterated in the case of Haris Marine Products vs. Export Credit Guarantee Corporation (ECGC) Ltd. reported in (2022) 20 SCC 776. It will be relevant to quote paragraphs 19 to 22 from the said judgment :
"B. Rule of contra proferentem
19. It is entrenched in our jurisprudence that an ambiguous term in an insurance contract is to be construed harmoniously by reading the contract in its entirety. If after that, no clarity emerges, then the term must be interpreted in favour of the insured i.e. against the drafter of the policy. In deciding the applicability of a cover note on houses swept away by floods, a Constitution Bench of this Court in General Assurance Society Ltd. v. Chandumull Jain [General Assurance Society Ltd. v. Chandumull Jain, 1966 SCC OnLine SC 208 : (1966) 3 SCR 500, para 11 : AIR 1966 SC 1644] held as follows : (SCC OnLine SC para 11) "11. ... In other respects there is no difference between a contract of insurance and any other contract except that in a contract of insurance there is a requirement of uberrima fides i.e. good faith on the part of the assured and the contract is likely to be construed contra proferentem that is against the company in case of ambiguity or doubt. ... (I)n interpreting documents relating to a contract of insurance, the duty of the court is to interpret the words in which the contract is expressed by the parties, because it is not for the court to make a new contract, however reasonable, if the parties have not made it themselves."
While the Court ultimately denied insurer's liability, it laid down the manner in which ambiguities were to be interpreted. Since then, a catena of judgments has upheld this approach.
20. In United India Insurance Co. Ltd. v. Pushpalaya Printers [United India Insurance Co. Ltd. v. Pushpalaya Printers, (2004) 3 SCC 694, para 6] , a Division Bench of this Court was confronted with interpreting the term "impact" in an insurance policy for protection against damage caused to the insured building. Interpreting the term to include damage caused by strong vibrations by heavy vehicles without "direct" impact, this Court held : (SCC pp. 698-99, para 6) "6. The only point that arises for consideration is whether the word "impact" contained in Clause 5 of the insurance policy covers the damage caused to the building and machinery due to driving of the bulldozer on the road close to the building... (I)t is also settled position in law that if there is any ambiguity or a term is capable of two possible interpretations, one beneficial to the insured should be accepted consistent with the purpose for which the policy is taken, namely, to cover the risk on the happening of certain event. ... Where the words of a document are ambiguous, they shall be construed against the party who prepared the document. This rule applies to contracts of insurance and Clause 5 of the insurance policy even after reading the entire policy in the present case should be construed against the insurer."
21. Similarly, in Sushilaben Indravadan Gandhi v. New India Assurance Co. Ltd. [Sushilaben Indravadan Gandhi v. New India Assurance Co. Ltd., (2021) 7 SCC 151, paras 37-42 : (2021) 3 SCC (Civ) 777 : (2021) 3 SCC (Cri) 118 : (2021) 2 SCC (L&S) 409] , this Court charted the evolution of the rule of contra proferentem, and relied inter alia on its explanation as provided under Halsbury's Laws of England : [ 5th Edn., Vol. 60, para 105.] "Contra proferentem rule.--Where there is ambiguity in the policy the court will apply the contra proferentem rule. Where a policy is produced by the insurers, it is their business to see that precision and clarity are attained and, if they fail to do so, the ambiguity will be resolved by adopting the construction favourable to the insured. Similarly, as regards language which emanates from the insured, such as the language used in answer to questions in the proposal or in a slip, a construction favourable to the insurers will prevail if the insured has created any ambiguity. This rule, however, only becomes operative where the words are truly ambiguous; it is a rule for resolving ambiguity and it cannot be invoked with a view to creating a doubt. Therefore, where the words used are free from ambiguity in the sense that, fairly and reasonably construed, they admit of only one meaning, the rule has no application."
22. The rule of contra proferentem thus protects the insured from the vagaries of an unfavourable interpretation of an ambiguous term to which it did not agree. The rule assumes special significance in standard form insurance policies, called contract d' adhesion or boilerplate contracts, in which the insured has little to no countervailing bargaining power. [Jacob Punnen v. United India Insurance Co. Ltd., (2022) 3 SCC 655, paras 34-37 : (2022) 2 SCC (Civ) 456] This consideration is highlighted in the facts of this case, since the risks that ECGC is mandated to cover is its business, and other insurers rarely foray into the field".
27. The fact of the present case is that the claimant here produced the two document of insurance policy. Admittedly, in the proposal form, he has mentioned "No". Now it has to be examined as to whether two policies have any relevancy in the case at hand. As in the proposal form, it mentions life disability, critical health insurance policy issued pending or lapsed meaning thereby that any insurance policy subsisting or lapsed dealing with any issue mentioned above was required to be disclosed by the husband of the complainant.
28. Counsel for the respondent said that it was out and out an investment policy not covered under the exclusion clause provided in the proposal form. Policy document of Bajaj Allianz itself shows that though of course mentioned in the upper portion Bajaj Allianz Investgain-Diamond, but body itself shows that the basic death benefit on the death of life assured during the terms of policy. The guaranteed minimum death benefit shall be the basic sum assured. It also provides the manner of premimum has to be deposited to the Bajaj Allianz Life Insurance. So, this Tribunal is of the view that the Bajaj Allianz Investgain- Diamond policy is nothing but a life insurance because of the proposal form itself mentioned about the existing or lapsed insurance policy.
29. In view of aforesaid discussion, it is clear that the appellant could not point out that (a) husband of the complainant was suffering from chronic kidney disease as her husband was examined by the assigned hospital and was found to be all in order except he had blood pressure which was in the knowledge of the Insurance Company. So this issue is decided against the appellant and in favour of the respondent and (b) but the issue of non- disclosure of previous insurance policy is decided against the respondent and in favour of the appellant for the reasons mentioned hereinabove.
30. In the light of aforesaid discussion as well as law laid down by the Hon'ble Supreme Court, this Tribunal is of the considered view that the impugned order dated 25.04.2024 passed in Complaint Case No.09 of 2023 by the District Consumer Forum suffers from illegality and cannot be sustained in the eyes of law and, therefore, the same is set aside.
31. Accordingly, the present appeal is allowed.
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SHIVAJI PANDEY PRESIDENT ..................J GRACIE BELL MOORE MIHSILL MEMBER ..................
MAJOR UNSAM NONGSIEJ MEMBER