NCDRC Sets Aside ₹37 Lakh Award to Insurance Nominee, Citing Non-Disclosure of Pre-Existing Renal Condition
Pranav B Prem
The National Consumer Disputes Redressal Commission (NCDRC), presided over by Justice A.P. Sahi and Mr. Bharatkumar Pandya, has allowed an appeal filed by the Life Insurance Corporation of India (LIC), setting aside an earlier order passed by the Uttar Pradesh State Consumer Disputes Redressal Commission. The Commission ruled that in insurance contracts, especially life insurance, the burden to disclose material information lies with the insured, and remanded the case for fresh consideration.
The matter involved a life insurance claim made by Reeta Srivastava, nominee and wife of the deceased insured, who had purchased a life policy from LIC in 2010 and passed away in June 2011 at Sahara Hospital, Lucknow. LIC had repudiated the claim on the ground of material non-disclosure, asserting that the insured had a pre-existing renal condition which he had failed to disclose while filling the proposal form, particularly under column 11(4), which relates to ailments of the kidneys.
The complainant, however, maintained that her husband had no knowledge of such a condition when the policy was procured. She claimed that it was only on 10.02.2011—over a year after the proposal form was filled—that a homeopathic doctor diagnosed kidney stones measuring 4mm and 3mm. She argued that these stones were asymptomatic and not life-threatening, and that the insured’s death was ultimately caused by cardio-respiratory arrest, which bore no relation to the kidney condition. The State Commission accepted this argument, awarding her ₹37 lakhs with 7% interest and ₹10,000 as litigation costs.
In appeal, LIC contended that the insured was under a legal obligation to disclose any material health conditions and that the existence of kidney stones of such size suggested a longer duration of the ailment. They relied on hospital records from Sahara Hospital, which mentioned the insured’s history of renal stones for “many years” and his use of homeopathic treatment. LIC argued that this evidence, submitted by the complainant herself, indicated prior knowledge and willful suppression, violating the principle of uberrimae fidei—utmost good faith. LIC further argued that the onus to disclose material facts rests on the proposer under Section 106 of the Indian Evidence Act.
The Commission found substance in LIC’s argument that the hospital document indicating a “many years” history of kidney stones carried probative value, especially since it was submitted by the complainant and not challenged as forged or inadmissible. The Commission also noted that the homeopathic prescription from February 2011 recorded the size of the stones with such specificity that it implied reliance on an ultrasound or radiological test, the report of which was not produced by the complainant. An expert report from Dr. Ram Manohar Lohia Hospital, which was sought by the Commission during the proceedings, noted that the duration of renal stone formation could only be determined through serial ultrasound reports, which were not made available.
Additionally, the Commission observed that the discharge summary from Sahara Hospital listed “Acute Renal Failure” among the diagnoses at the time of death, further reinforcing the possibility of a prolonged kidney condition. According to the Commission, the use of the phrase “many years” to describe the renal condition could not reasonably be interpreted as referring to a period of merely a few months. This, coupled with the lack of radiological evidence and the disclosure obligations under insurance law, led the Commission to conclude that the State Commission had failed to assess the material evidence in accordance with established legal standards.
Referring to landmark judgments including Reliance Life Insurance Co. Ltd. v. Rekhaben Nareshbhai Rathod, (2019) 6 SCC 175, Manmohan Nanda v. United India Assurance Co. Ltd., (2022) 4 SCC 582, and Mahakali Sujatha v. Future Generali India Life Insurance Co. Ltd. (2024 SCC OnLine SC 525), the Commission emphasized the duty of full disclosure in insurance contracts and clarified the legal position regarding the burden of proof, materiality, and knowledge of pre-existing conditions.
The National Commission allowed LIC’s appeal, set aside the State Commission's order awarding ₹37 lakhs to the complainant, and remanded the case to the State Commission for fresh adjudication in accordance with law. The parties have been directed to appear before the State Commission on 01.07.2025, which has been asked to dispose of the matter expeditiously.
Appearance
For Appellants: Mr. Anoop K. Kaushal, Advocate
For Respondents: Mr. Jitesh Vikram Srivastava, Advocate Mr. Prajesh Vikram Srivastava, Advocate
Cause Title: Life Insurance Corporation of India & Ors. V. Smt. Reeta Srivastava & Anr.
Case No: NC/FA/13/2023
Coram: Hon'ble Mr. Justice A. P. Sahi [President], Hon'ble Mr. Bharatkumar Pandya [Member]
[Read/Download order]
