State Consumer Disputes Redressal Commission
Life Insurance Corporation Of India vs M.Prasanna Laxmi on 25 March, 2026
1
BEFORE THE TELANGANA STATE CONSUMER DISPUTES
REDRESSAL COMMISSION : HYDERABAD.
FA.NO.569 OF 2022 AGAINST ORDERS IN
CC.NO.20 OF 2021, DISTRICT CONSUMER COMMISSION,
KHAMMAM
Between:
Life Insurance Corporation of India,
Rep. by its Branch Manager,
Opp. Tribal Welfare Gurukula Patasala,
Cherla Road, Bhadrachalam Branch,
Bhadradri Kothagudem District.
......Appellant/Opposite Party
And
M.Prasanna Laxmi, W/o.Late Srinivasa Chary,
Aged 40 years, Occ: Housewife,
R/o.H.No.12-2-64, G.C.C. Road,
Bhadrachalam,
Bhadradri Kothagudem District.
......Respondent/Complainant
Counsel for the Appellant/Opposite Party: M/s.Ramakrishna Varada
Mr.Hrishikesh Ganu
Counsel for the Respondent/Complainant: M/s. KNS Sampath Kumar
QUORAM:
HON'BLE SMT.JUSTICE DR.G.RADHA RANI ......PRESIDENT
&
HON'BLE SMT.MEENA RAMANATHAN ......MEMBER (NON-JUDICIAL)
WEDNESDAY, THE TWENTY FIFTH DAY OF MARCH
TWO THOUSAND TWENTY SIX
******
Order: (Per Smt.Dr.G.Radha Rani, Hon'ble President)
1.This appeal is preferred by the Opposite Party aggrieved by the orders dated 27.04.2022 in CC.No.20/2021 passed by the District Consumer Disputes Redressal Commission, Khammam.
2. For the sake of convenience, the parties are hereinafter referred as arrayed before the District Commission as Complainant and Opposite Party.
3. The case of the Complainant was that, the Complainant was the wife of the deceased M.Srinivasa Chary. The deceased 2 M.Srinivasa Chary had obtained a policy certificate premium endowment plan from Opposite Party to cover the death benefits for Rs.4,00,000/- by way of paying quarterly premium of Rs.8,690/- vide policy No.699154222 valid from 06.02.2018. On 12.02.2019, suddenly the deceased M.Srinivasa Chary sustained heart stroke and was shifted to Srinivasa Nursing Home, Bhadrachalam and while undergoing treatment, died on the same day. The Complainant filed an application before the Opposite Party by submitting the original policy and death certificate for grant of Rs.4,00,000/- under death benefits. The Complainant made several rounds to the office of the Opposite Party, but the Opposite Party did not pay the death benefit. Finally on 30.11.2019, the Opposite Party sent a letter to the applicant repudiating the liability stating that at the time of taking the policy, he was suffering with gastric trouble and by suppressing the said fact, he obtained the policy. The Complainant contended that the deceased died due to heart attack. Gastric problem was not such a disease which could lead to his death. Only to escape from the liability, the Opposite Party created the false allegation. The Opposite Party already settled two claims of the deceased after his death vide policy bearing No.688489796 and 689484905 for an amount of Rs.1,00,000/- and Rs.1,27,400/- respectively. Vexed with the attitude of the Opposite Party, the Complainant filed the Consumer Complaint alleging deficiency of service of Opposite Party claiming Rs.4,00,000/- towards death benefit under policy No.699154222 and to pay damages of Rs.50,000/- for deficiency of service.
4. (a) The Opposite Party filed written version admitting obtaining the insurance policy by the deceased for a sum assured of Rs.4,00,000/- on 30.06.2018 (date of commencement of risk) during his lifetime and that he nominated his wife (the Complainant) as the nominee under the policy. The mode of payment of premium was quarterly for Rs.8,690/-. They denied the other averments made against the Opposite Party except the settlement of death claim under two other policies of the deceased life assured and contended that under the above policies, the 3 duration of commencement of policies was more than three years and hence, the same were treated as non-early claims and were settled by their Bhadrachalam branch office. But in the present case, the policy duration was only 7 months and 12 days i.e., from 30.06.2018 to 12.02.2019 (date of commencement of risk to date of death). As such the claim under this policy was treated as early claim and as per claims rules, the claims process was initiated. During the said claim process, it transpired that the said life assured had taken medical treatment for Duodenal Ulcer since 2016. The treatment reports from Care Hospital, Hyderabad, Endoscopy Report dated 10.07.2017 revealed that the said life assured was suffering from Chronic Duodenal Ulcer and was under medical treatment for the same. The proposer/life assured had intentionally suppressed the material fact of his pre-proposal medical treatment, while furnishing reply to the question No.11 (a)
(b) (d) (g) contained under proposal for insurance dated 30.06.2018 signed by the said proposer/life assured. As per the medical treatment reports from Care Hospital, Hyderabad, the deceased life assured was suffering from Chronic Duodenal Ulcer and was under treatment. The said fact was suppressed while taking the policy on 30.06.2018. The deceased life assured had taken treatment for severe Gastritis and Chronic Duodenal Ulcer and was under treatment as per the Care Hospital, Hyderabad reports dated 14.04.2016 and 10.07.2017 which were not mentioned while taking policy on 30.06.2018. The suppression of material facts had a bearing on the granting of the risk. The same was clearly done with an intent to mislead the Opposite Party Corporation. As such the Opposite Party Corporation had repudiated the claim and considered for refunding the total premiums paid under the policy since inception towards full and final settlement of the claim amounting to Rs.26,070/-. The LIC Divisional Office had instructed the Bhadrachalam Branch to pay the above amount to the Claimant. Inspite of several reminders by the Bhadrachalam Branch vide registered letters dated 06.03.2020, 16.03.2020 and 16.06.2020, the Claimant did not submit the discharge voucher for the above amount. Even as on today, on receipt of the discharge voucher, the Opposite Party Corporation was ready to pay the 4 above said amount of Rs.26,070/- and relied upon the judgment of the Hon'ble Apex Court in Civil Appeal No.3397 of 2020 arising out of SLP (C) No.10652 of 2020.
(b) The Opposite Party further contended that as per their primary investigation, the evidence was against the admission of the claim. Since LIC works in the larger interest of policy holders, they repudiated the claim in extreme circumstances only and prayed to dismiss the complaint as untenable.
5. The Complainant filed her proof affidavit as PW1 and got marked Ex.A1 to A5. The Manager (Legal & HPF) (DM) of LIC India, Divisional Office, Warangal filed his proof affidavit as RW1 and got marked Ex.B1 to B12.
6. On considering the evidence on record, the District Commission allowed the complaint in part directing the Opposite Party to pay Rs.4,00,000/- towards sum assured and other benefits covered under the policy No.699154222 with interest @ 6% p.a. from the date of filing of the complaint i.e., 19.03.2021 till the date of realization to the Complainant and to pay Rs.10,000/- towards damages and costs of the litigation.
7. Aggrieved by the said order passed by the District Commission, the Opposite Party preferred this appeal contending that:
The order of the District Commission was contrary to the terms and conditions of the LIC of India. Without properly appreciating the true facts and circumstances of the case, the District Commission erred in disposal of the complaint. The District Commission failed to consider the contents of the written version filed by the Appellant/Opposite Party. The District Commission ought to have considered that the policy holder was aware of the treatment particulars and his health condition at the time of taking the policy and the same was not disclosed to the Appellant.5
The District Commission ought to have considered that, had the policy holder submitted his correct health condition in the proposal form, the Appellant would not have given a policy to him.
The District Commission failed to take into consideration that LIC contracts are contracts of Uberrima Fides (Utmost Good Faith). The policy holder was under an obligation to disclose truthfully all the information sought in the proposal form and to the medical examiner about his health condition at the time of conducting medical examination for the purpose of issuance of insurance policy. Thus the onus of disclosing the facts as to his health condition would lie with the proposer only.
The District Commission failed to see that since death occurred within three years, the claim under the policy was treated as very early claim and it was found in the early claim investigation that the life assured had taken medical treatment for Duodenal Ulcer prior to issuance of the policy. The life assured had intentionally suppressed the facts of his pre-proposal medical treatment/illness related to Chronic Duodenal Ulcer while furnishing reply to question No.11 (a)
(b) (d) (g) under the proposal form dated 30.06.2018 signed by the life assured.
The District Commission failed to take into consideration that as per the medical treatment reports from Care Hospital, Hyderabad. As per the Care Hospital Endoscopy Report dated 10.07.2017, the deceased life assured was suffering from Chronic Duodenal Ulcer and was under
treatment. The said fact was suppressed by the life assured while taking the policy.
The District Commission failed to note that the Claimant had not denied the pre-existing disease/treatment for the Duodenal Ulcer in her affidavit;
and prayed to set aside the order passed by the District Consumer Disputes Redressal Commission, Khammam and to allow the appeal.6
8. Notice was served upon the Respondent and a counsel by name Sri KNS Sampath Kumar filed vakalat for Respondent on 28.12.2022, but since then there is no representation for the Respondent. Written arguments filed by the counsel for the Appellant.
9. Now the point for consideration is:
Whether the order passed by the District Commission is in accordance with law and facts on record or whether the same is liable to be set aside, modified or interfered with in any manner?
10. Point:
As seen from the written arguments filed by the learned counsel for the Appellant, the deceased M.Srinivasa Chary, life assured had answered falsely to the vital questions regarding his health in the proposal form. The proposer was obliged to disclose all facts about his health while answering questions in the proposal form. In a contract of insurance, any fact would influence the mind of a prudent insurer in directing whether to accept or not the risk was a material fact. The application form marked under Ex.B1 submitted by the Complainant would go to show that the proposer had suppressed facts to the Appellant. Since the death occurred within three years, the claim under the policy was treated as early claim and during the said claim process, it transpired that the said life assured had taken medical treatment for Duodenal Ulcer since 2016. The said fact could be ascertained from Ex.B12, Care Hospital Report. The life assured had intentionally suppressed the material facts of his pre-proposal medical treatment/illness related to Chronic Duodenal Ulcer while furnishing reply to the questions contained under the proposal form, Ex.B1 [Q.No.11 (a) (b) (d) (g)]. The object of the proposal form was to gather information about a potential client. The proposal forms were a significant part of the disclosure procedure and warrant accuracy of the statements made in the form. As per the settled principles of law, the contract of insurance was made in utmost good faith and suppression of any material information at 7 the time of submission of proposal form would justify repudiation of claim by the insurer.
11. As seen from the record, it was not in dispute that the policy was in force and the death of the life assured occurred within eight months due to a heart attack. The ground for repudiation was the alleged non-disclosure of treatment for Duodenal Ulcer and Gastritis. It is to be noted that though the contract of insurance is one of utmost good faith, every non-disclosure does not amount to suppression of a material fact. The test is whether the fact suppressed is material to the risk undertaken by the insurer. In the present case, the ailments allegedly not disclosed are Duodenal Ulcer and Gastritis which are Gastro Intestinal disorders. The cause of death is heart stroke which is a Cardio Vascular event. The Appellant/Opposite Party had not placed any material on record to establish that the said ailments were life threatening in nature or they had any nexus or causal connection with the cause of death or they were of such a nature as would have influenced the insurer in deciding whether to issue the policy. In the absence of such evidence, we are unable to accept the contention that the alleged non-disclosure amounts to suppression of material fact. Even though the death occurred within a short period of eight months, the insurer cannot repudiate the claim merely on suspicion. The burden lies on the insurer to prove that the suppressed fact was material and relevant to the risk, which has not been discharged in the present case.
12. It is also well settled that non-disclosure of minor or unrelated ailments do not justify repudiation, particularly when there is no nexus between the ailment and the cause of death. Therefore, we are of opinion that the order of the District Commission is justified and the same was not in error to set aside the same.
13. In the result, the appeal is dismissed confirming the judgment of the District Commission, Khammam passed in CC.No.20/2021 dated 27.04.2022, in considering the repudiation 8 of the claim by the Appellant/Opposite Party/Insurance Company as deficiency of service.
The Respondent/Complainant is permitted to withdraw the amount deposited by the Appellant/Opposite Party at the time of filing the appeal along with accrued interest, towards part payment after lapse of the appeal time.
Dictated to the Stenographer, transcribed and typed by her, corrected by me and pronounced by us in the open Court on this the 25th day of March, 2026.
Sd/- Sd/-
PRESIDENT MEMBER-NJ
Dt: 25.03.2026
UC*