NCDRC: Insurance Claim Cannot Be Repudiated For Leaving Column Blank In Proposal Form, Bharti AXA Directed To Pay ₹25 Lakh With Interest
Pranav B Prem
The National Consumer Disputes Redressal Commission (NCDRC), New Delhi Bench comprising Dr. Inder Jit Singh (Presiding Member) and Dr. Sudhir Kumar Jain (Member) has held that leaving a column blank in an insurance proposal form does not amount to furnishing a false answer, and therefore, an insurance company cannot deny a claim on this ground.
Background
The case arose from a First Appeal No. 722 of 2021 filed by the legal heirs of Smt. Chhoti Devi against an order of the Rajasthan State Consumer Disputes Redressal Commission (SCDRC) dated 26.03.2021. The State Commission had upheld the repudiation of an insurance claim by Bharti AXA Life Insurance Co. Ltd.
The insured, Mr. Padam Soni, son of late Chhoti Devi, had purchased a life insurance policy for a sum assured of ₹25 lakh with a term of 20 years by paying an annual premium of ₹10,900. The policy commenced on 28.12.2015. Tragically, Mr. Soni died of a heart attack on 17.01.2017, barely a year after obtaining the policy.
When the claim was filed, Bharti AXA repudiated it through a letter dated 08.06.2017, alleging that the insured had concealed information regarding existing policies in his proposal form. The insurer claimed that the insured had wrongly answered “No” to the question concerning existing or proposed insurance policies. Aggrieved, Chhoti Devi filed a complaint before the Rajasthan SCDRC, which dismissed her case in 2021. She thereafter preferred an appeal before the NCDRC.
Appellants’ Submissions
Appearing for the Appellants, Advocates Ankit Acharya and Ritu Chaudhary argued that the repudiation was unjustified since the relevant column in the proposal form was left blank and not answered “No” as alleged by the insurer. They contended that leaving a column blank is not the same as concealing or misrepresenting facts.
It was also pointed out that the proposal form was filled digitally in English by the company’s agent, while the insured, who did not know English, had simply answered questions orally. The agent, however, failed to fill the column on existing/proposed insurance. Thus, no false declaration was made by the insured. The Appellants further argued that Bharti AXA itself had issued three insurance policies to the deceased, including two on the same day, i.e., 08.12.2015. Hence, the company was already aware of his existing policies and could not allege concealment.
Respondent’s Defence
On the other hand, Advocate Aakash Vashishta, appearing for Bharti AXA, submitted that the insured had intentionally mis-stated material facts regarding previous policies. It was argued that suppression of such information amounted to fraud, justifying repudiation of the claim. The insurer relied on case law to argue that insurance contracts are contracts of utmost good faith and any misrepresentation or omission entitles the company to repudiate liability.
Commission’s Observations
The NCDRC carefully examined the repudiation letter, proposal form, and rival submissions. It found merit in the Appellants’ case, holding that the relevant column in the form was left blank and not marked as “No” by the insured. The Bench observed: “Leaving a column blank in the proposal form does not amount to giving a false answer. Had this information been material, the Insurance Company ought to have insisted on getting these columns filled before issuing the policy.”
The Commission further noted that the entire proposal form appeared to have been type-filled by an official or agent of the insurer, and not by the insured himself. Therefore, the responsibility to ensure completeness of the form lay with the insurer. It also emphasized that concealment can only be said to exist if done with fraudulent intent. In this case, no such intent was proved. On the contrary, since Bharti AXA had itself issued multiple policies to the deceased, it could not plead ignorance of existing insurance coverage.
Final Order
Setting aside the order of the Rajasthan State Commission, the NCDRC allowed the appeal and directed Bharti AXA Life Insurance Co. Ltd. to:
Pay the sum assured of ₹25 lakh to the Appellants,
Along with interest at 9% per annum from the date of filing the complaint till the date of payment,
Within 45 days of the order.
The NCDRC ruled that an insurance claim cannot be denied merely because a column in the proposal form was left blank, especially when the insurer had prior knowledge of the insured’s other policies and its agent was responsible for filling the form. Since the insured had not wilfully concealed any information, the repudiation was unjustified and the legal heirs of Chhoti Devi were held entitled to the policy benefits.
Appearance
For the Appellant: Mr. Ankit Acharya, Advocate , Ms. Ritu Chaudhary, Advocate
For the Respondents: Mr. Aakash Vashishta, Advocate for R-l to 3 (VC) None- R-4
Cause Title: Chhoti Devi V. Bharti AXA Life Insurance Co. Ltd. & 3 Ors.
Case No: First Appeal No.722 Of 2021
Coram: Dr. Inder Jit Singh [Presiding Member], Dr. Sudhir Kumar Jain [Member]
