Bookmark
PDF
Share
CaseIQ

RELIANCE NIPPON LIFE INSURANCE COMPANY LTD. & 2 ORS. v. MANJEET KAUR

National Consumer Disputes Redressal Commission

Apr 26, 2023

Judgment

Subsequent
References

CaseIQ

Smart Summary (Beta)

National Consumer Disputes Redressal Commission — Revision Petition No. 916 of 2020

Factual and Procedural Background

This matter arises from a life insurance claim dispute between Reliance Nippon Life Insurance Company Ltd. & others (Petitioners / Opposite Parties) and Manjeet Kaur (Respondent / Complainant). The insured (the Complainant's husband, identified as Lt. Sh. Jaswinder Singh) purchased a life insurance policy (No. 53164444) in March 2018 under the Reliance Life Long Savings plan, with a basic sum assured of Rs.16,94,504 and an annual premium noted as Rs.39,999.47. The Complainant was the nominated beneficiary.

After the insured's untimely death in July 2018 (the record contains references to both 20.07.2018 and 22.07.2018), the Complainant submitted a death claim. The Complainant alleges that company representatives visited, took documents to process the claim, used abusive language, and that an investigator later demanded a bribe ("palm to be greased"). The Opposite Parties repudiated the claim by letter in 2019 (the record contains references to repudiation letters dated 20.04.2019 and 30.04.2019) on the ground that the insured had misrepresented material facts (income and occupation) and had submitted invalid Income Tax Returns.

The Complainant filed a Consumer Complaint before the District Consumer Disputes Redressal Forum, Ferozepur (Consumer Case No. 516/2019), seeking the insured amount (Rs.16,94,504), compensation (Rs.1,00,000) and litigation expenses (Rs.15,000) with interest. The District Forum allowed the Complaint by order dated 19.12.2019, directing payment of Rs.16,94,504 with interest at 9% p.a. from date of filing and Rs.5,000 as consolidated compensation.

The Opposite Parties filed a First Appeal (No. 130 of 2020) before the State Commission, Punjab, Chandigarh. The State Commission dismissed the appeal in limine and upheld the District Forum's order by order dated 04.03.2020. The Petitioners then filed this Revision Petition (No. 916 of 2020) before the National Commission. The National Commission heard the matter and delivered an order dated 26 April 2023 allowing the Revision Petition, setting aside the decisions of both lower fora, and dismissing the Complaint.

Legal Issues Presented

Whether the Opposite Parties (insurer) were justified in repudiating the death claim on the ground of misrepresentation of material facts (income and occupation) by the insured.
Whether the District Forum and State Commission erred in allowing the claim despite the insurer's contention of misrepresentation and the documentary evidence (electronic Income Tax Returns) on record.
Whether the matter involved elements of fraud rendering the summary consumer forum proceedings inappropriate and whether civil courts or detailed investigation were required (as contended by the Opposite Parties).
Whether the non-verification of electronically filed Income Tax Returns (ITR) within the period claimed by the Respondent could be treated as absence of misrepresentation, and the correct temporal period for verifying e-filed returns (contention as to 120 days vs six months).

Arguments of the Parties

Respondent / Complainant's Arguments

The insured purchased the policy to secure the family; the Complainant (nominee) is entitled to the sum assured on death of the insured.
The Complainant provided required particulars and documents to the insurer's representatives who took them with assurances that the claim would be settled; the insurer later repudiated the claim.
The Complainant alleged misconduct by the insurer's representatives (vulgar language) and alleged that an investigator demanded a bribe to help pass the claim.
Based on these facts the Complainant sought the full insured amount (Rs.16,94,504), compensation, costs and interest.

Petitioners / Opposite Parties' (Insurer's) Arguments

The insured misrepresented material facts about his income and occupation in the Proposal Form; he declared annual income as Rs.4,00,000 and occupation as contractor of white-washing, but documentary evidence (Income Tax Returns) did not support that.
The Income Tax Returns relied upon by the insured were electronically filed on 04.03.2018 and, according to the insurer's RTI-enquiry reply, were invalid; the policy was proposed immediately thereafter (dates in record vary), which indicates misrepresentation.
The insured died within a short period (within about four months and some days) of taking the policy, which the insurer said suggested mala fide intention or part of a larger insurance fraud (reference made to a Haryana Police Special Task Force investigation into a syndicated fraud involving manipulated claims).
The insurer contended that insurance contracts are based on the doctrine of Utmost Good Faith (Uberrimae Fidei) and that Section 45 of the Insurance Act permits repudiation where material misrepresentation exists.
The insurer argued that non-verification of e-filed ITRs cannot be equated to absence of misrepresentation; the insurers relied on RTI reply and contended the correct verification period for e-returns is 120 days (contention raised in the appeal before the National Commission).
The Opposite Parties relied on prior case law (several NCDRC and other decisions) to support their right to repudiate where material facts were misrepresented.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Bharti & Others v. Bajaj Allianze Life Insurance Company Limited (decided 18.02.2014)	Relied upon by the Opposite Parties (as recorded) in support of insurer's contention that misrepresentation/fraud justifies repudiation.	The case was cited by the Opposite Parties; the National Commission noted the insurer's reliance on prior NCDRC decisions as part of its defence that repudiation was warranted for misrepresentation.
PNB Metlife LIC Limited v. Mopidevi Lalitha (2017 (4) CPR 371)	Relied upon by the Opposite Parties to support the insurer's position on misrepresentation and repudiation.	Recorded as relied upon by the Opposite Parties; the National Commission considered the broader settled law on misrepresentation in insurance contracts in reaching its decision.
Rakesh Patel v. LIC of India and Another (2015 (1) CPJ 716)	Relied upon by the Opposite Parties in support of repudiation for misrepresentation.	Cited by the Opposite Parties; the National Commission accepted the insurer's argument that misrepresentation of income/occupation is material and justified repudiation.
LIC of India & Anr. v. Balbir Kaur (I (2009) 212 (NC))	Relied upon by the Opposite Parties to support the proposition that early death after policy issuance and misrepresentation may indicate fraud or justify repudiation.	This decision was cited by the Opposite Parties; the National Commission took the insurer's fraud/early-death contentions into account while focusing on documentary misrepresentation.
LIC Vs. G.M. Channabasamma ((1991) 1 SCC 357) — (decided 06/12/1990)	One of the Apex Court decisions cited in the opinion as laying down the principle of "Uberrimae Fidei" (utmost good faith) applicable to insurance contracts.	The National Commission explicitly relied on Apex Court authorities including this case to reaffirm that material misstatements by an insured permit rescission/repudiation of cover.
LIC Vs. Asha Goel & Anr. (Appeal Civil 4186-87 of 1988, decided 13/12/2000)	Cited as an Apex Court authority concerning insurance law and principles governing disclosure and good faith.	Invoked by the National Commission to support the general legal principle that material facts must be truthful and misrepresentation is a ground for rescission/repudiation.
Satwant Kaur Sandhu Vs. New India Assurance Co. Ltd., IV (2009) CPJ 8 (SC)	Cited among Apex Court authorities cited to explain the settled law on utmost good faith in insurance contracts.	The National Commission cited this decision as part of the settled law confirming that material misrepresentation allows the insurer to repudiate the claim.

Court's Reasoning and Analysis

The National Commission undertook a step-by-step examination of the documentary record and the findings below:

Documentary comparison: The Commission examined the insured's Proposal Form (annexed as Annexure 'E') and the electronically filed Income Tax Returns for the Assessment Years 2016-17 and 2017-18 (Annexures 'F' & 'G'). The Proposal Form (submitted on 05/03/2018 as recorded) stated annual income as Rs.4,00,000 from "Business". The e-filed ITRs (submitted online on 04/03/2018) recorded gross total incomes of Rs.2,65,000 and Rs.2,99,000 respectively. The Commission found a manifest discrepancy between the income declared in the Proposal Form and the earlier ITRs.
Legal principle applied: The Commission emphasized the settled legal doctrine of Uberrimae Fidei (utmost good faith) in insurance contracts as laid down in Apex Court jurisprudence. It reiterated that an insurance contract requires truthful disclosure of all material facts and that material untruths constitute valid grounds for rescission or repudiation.
On the weight of verification responsibilities: The Commission rejected the view (attributed to the State Commission) that the insurer must have independently satisfied itself about every detail in the Proposal Form before acceptance and that mere non-verification absolves misrepresentation. Instead, the National Commission regarded such a stance as an "excessive and uncalled for indulgence" favoring the insured, contrary to settled law.
IRDA guidance: The Commission observed that IRDA guidelines do not mandate any specific verification in cases where the premium is below Rs.1 lakh per annum and thus found that the lack of specific mandated verification in IRDA guidelines did not prevent the insurer from relying on documentary inconsistencies to repudiate the claim.
On competing procedural/contention points: The Petitioners had argued, among other things, about the temporal period for verification of e-filed returns (asserting a 120-day period) versus the Respondent's contention of a six-month period; however, the Commission's core analysis focused on the contemporaneous documentary mismatch between the declared income in the Proposal Form and the online ITRs filed the day before, treating the mismatch as constituting a material misrepresentation.
Conclusion from analysis: Having applied these principles to the facts, the National Commission concluded that both the District Forum and the State Commission committed material irregularity by allowing the claim without properly appreciating the insurer's defence based on wilful misrepresentation of income. Consequently, it found that the insurer was justified in repudiating the claim.

Holding and Implications

Holding: The Revision Petition is ALLOWED. The National Commission set aside the orders of both the District Consumer Forum (dated 19.12.2019) and the State Commission (dated 04.03.2020) and dismissed the Complainant's complaint.

Direct consequences and implications:

The Complainant's claim for the insured amount (Rs.16,94,504) and ancillary reliefs is dismissed; the insurer's repudiation on the ground of material misrepresentation was upheld by the National Commission.
No order as to costs was made (the National Commission recorded "No Orders as to costs").
Pending applications, if any, were disposed of.
The opinion does not announce or attempt to create a new legal precedent beyond applying established Apex Court principles on the doctrine of Uberrimae Fidei and the consequences of material misrepresentation in insurance contracts; the decision applies those settled principles to the factual matrix of this case.

This summary is based exclusively on the contents of the provided opinion and does not add or infer information beyond what the opinion itself records.

Show all summary ...

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

NEW DELHI

REVISION PETITION NO. 916 OF 2020

(Against the Order dated 04/03/2020 in Appeal No. 130/2020 of the State Commission Punjab)

1. RELIANCE NIPPON LIFE INSURANCE COMPANY

LTD. & 2 ORS. ...........Petitioner(s) Versus

1. MANJEET KAUR ...........Respondent(s)

BEFORE:

HON'BLE MR. JUSTICE SUDIP AHLUWALIA,PRESIDING MEMBER For the Petitioner : Mr. Varun Bedi, Advocate For the Respondent : NEMO

Dated : 26 April 2023

ORDER

This Revision Petition has been filed by the Petitioners/ Opposite Parties against Respondent / Complainant challenging the impugned order dated 04.03.2020 passed by the State Consumer Disputes Redressal Commission, Punjab, Chandigarh in First Appeal bearing No. 130 of 2020. Vide this order, the State Commission dismissed the Appeal while upholding the order dated 19.12.2019 passed by the District Consumer Disputes Redressal Forum, Ferozepur in Consumer Case No. 516/2019.

2. The brief facts of the case are that the Complainant's husband namely Lt. Sh. Jaswinder Singh had taken a Life Insurance Policy bearing no. 53164444 in March, 2018 from the Opposite Parties and had paid a premium of Rs.39,999.47/-. The deceased insured had nominated the Complainant/ his wife in the Insurance Policy and hence, the Complainant is a consumer of the Opposite Parties. It was submitted by the Complainant that the policy was named under the plan Reliance Life Long Savings having the policy term of 25 years with basic sum assured of Rs.16,94,504.00/-. It was further submitted that in case of death of the insured during the continuation of policy, the nominee would be entitled to an amount equal to the basic sum assured. It was also stated that the particulars of the insured were rightly mentioned as were asked and as per the instructions of the agent of the company and further the sole purpose of the insured to purchase the policy was to secure the future of his family in case of his untimely death. It was also averred that the policy holder met his untimely death on 20.07.2018 and the death claim was filed with the Opposite Parties by the Complainant. The information regarding death of the insured was given to the Opposite Parties through the Opposite Parties' representatives who had visited the Complainant and the representatives had also taken all the documents presented by the Complainant with an assurance that the claim would be settled at the earliest and the documents would be returned. It was further submitted that the Opposite Parties intimated the Complainant that the death claim has been repudiated vide letter dated 20.04.2019. The Complainant on various occasions requested the officials of the Opposite Parties to settle the claim, however, the representatives of the Opposite Parties used vulgar and uncivilised language with the Complainant. Hence, the Complaint was filed before the District Forum by the Complainant being aggrieved by the acts of the Opposite

Parties in non-settling of the claim, being unresponsive, the representatives of the Opposite Parties taking all the documents under the veil of settling the claim, withholding them, and then rejecting the claim and depriving the Complainant of her lawful claim.

3. It was also submitted by the Complainant that an investigator who visited the Complainant after the claim was filed demanded her palm to be greased in order to help pass the claim. Therefore, the Complaint was filed before the District Forum seeking payment of insured amount of Rs.16,94,504/-, compensation of Rs.1,00,000/- and litigation expenses of Rs.15,000/- along with interest from the date of actual lodging of the claim.

4. The Opposite Parties appeared before the District Forum and resisted the Complaint and denied all the allegations thereby denying deficiency in service on their part. It was contended by the Opposite Parties that the policy was taken by the insured by suppressing material facts about his income and occupation. In the Proposal Form, the insured disclosed his annual income of Rs.4,00,000/- being a contractor of white-washing. However, the Income Tax Returns for the assessment years 2016-17 & 2017-18 was found invalid as per the information provided under RTI by Income Tax Department. It was further contended that the alleged Income Tax Returns were filed on 04.03.2018 and the policy was proposed on 05.03.2018. It was averred that the DLA neither had income of Rs.4,00,000/- nor he was the contractor of white-wash and the policy was taken on false mis-representation on the fact of his income and occupation. Reliance was placed on various decisions of the NCDRC in 'Bharti & Others v. Bajaj Allianze Life Insurance Company Limited' decided on 18.02.2014, in 'PNB Metlife LIC Limited v. Mopidevi Lalitha' 2017 (4) CPR 371 and 'Rakesh Patel v. LIC of India and Another' 2015 (1) CPJ 716.

5. It was further the case of the Opposite Parties that the Ld. District Forum had no jurisdiction try the matter as the element of fraud was involved in the Complaint. The DLA was a resident of Ferozepur City whereas the policy in question was proposed at Panchkula (Haryana) and the DLA died within 4 months and 11 days from the taking of the insurance policy. It was also submitted that during that time, the Haryana Police Special Task Force unearthed a syndicated Insurance Fraud in which the insurance policies were taken in the name of cancer/critical illness patients and thereafter their death was shown as accident in connivance with Doctors and Police Officials, and the facts of this Complaint are similar to the modus operandi used by the said syndicate fraud. Hence, the matter required detailed investigation in order to unearth the scam involved in the present case which is not possible in a summary proceeding, and as such Civil Courts would have the jurisdiction to try and decide the present matter. It was also averred that the policy was taken on 09.03.2018 and the insured died on 20.07.2018 i.e., within 4 months & 11 days from taking the policy, and early death of insured clearly proves that the policy in question was taken by the Complainant with a malafide intention. Reliance was placed on 'LIC of L.I.C Of India & Anr. v. Balbir Kaur .' I (2009) 212 (NC). It was also contended that the insurance contracts are contracts based on 'Utmost Good Faith' and that the Life Assured being a party to the contract is bound to disclose all material facts known to him at the time of proposal. Reliance was also placed on various judgements of Hon'ble Supreme Court of India and National Commission. It was further averred that the Complainant is not a 'Consumer' as defined under section 2(d) of the Consumer Protection Act, 1986 and that the sum assured is strictly payable as per terms and conditions of the policy. It was further contended that the Opposite Party received the intimation regarding the death of DLA due to heart attack on 14.09.2018 and the policy was issued on 09.03.2018 and the DLA

died on 22.07.2018. During investigation of the claim, it was found that the DLA had mentioned wrong facts about his income and occupation and submitted invalid Income Tax Returns in support of his income and consequently, the Opposite Party sought information under RTI Act from Income Tax Department. Subsequently, it was proved from the reply of the department that the ITR was not valid and hence, the claim was repudiated on 30.04.2019. Therefore, the Opposite Parties prayed for dismissal of the complaint with costs.

6. The Ld. District Forum vide its order dated 19.12.2019 allowed the Complaint and observed inter alia:-

"7. It is the admitted case of the parties that deceased husband of the complainant purchased life insurance policy bearing after paying requisite premium for sum assured of Rs.16,94,504/-. It is also the admitted case of the parties that the complainant is nominee of the above said insurance policy. The reason for withholding the insured amount by the insurance company due to misrepresentation of the fact of income and occupation. The learned counsel for the opposite parties argued that during the investigation it was found that income tax returns for the years 2016-17 and 2017-18 was found invalid. As per information provided by the Income Tax Department, both were filed on 04.03.2018 and the policy was proposed on 03.05.2018. The DLA was not having income of Rs.4 Lac as disclosed in the proposal form. So the Opposite Parties rightly repudiated the claim of the complainant. On the other hand, the learned counsel for the complainant argued that DLA filed his income tax returns for the assessment years 2016-2017 and 2017-2018 on 04.03.2018, e-filing system of income tax department and as per procedure these income tax returns were to be verified by sending the hard copies of these returns to Income Tax Department after duly signed by the assesse within six months from e-filing of the returns. Before sending the hard copy of the income tax returns for verification within stipulated time of six months, the DLA died on 22.07.2018 as such these income returns were not verified by the Income Tax Department. There is no fault on the part of the DLA or complainant for not verification of these income tax returns as the DLA died much prior within stipulated time for verification of the income tax return. It is wrong that DLA made any misrepresentation regarding his income or occupation to opposite parties at the time of purchase of insurance policy. The Opposite Parties have not pleaded in what regard the deceased husband of the complainant has misrepresentation regarding the occupation or income. They have not produced on record any evidence or any documents in support of their allegation that husband of the complainant made any misrepresentation regarding his income and occupation. The opposite parties are wrongly and illegally retaining the amount on false ground. The opposite parties are guilty of rendering deficient services to the complainant. The opposite parties are also liable to pay litigation expenses to the complainant."

7. Hence the Opposite Parties were directed to pay Rs.16,94,504/- as insurance claim along with interest at the rate of 9% p.a. from date of filing of complaint till realization and Rs.5,000/- as consolidated compensation.

8. Aggrieved by the above order, First Appeal bearing No. 130 of 2020 was filed by Appellants/ Opposite Parties against the Respondent/ Complainant before the State Consumer Disputes Redressal Commission, Punjab, Chandigarh.

9. The Ld. State Commission vide impugned order dated 04.03.2020 dismissed the Appeal in limine while upholding the order of Ld. District Forum and observed that:

"12. In view of our above discussion, the opposite parties wrongly and arbitrarily repudiated the claim of the complainant and it amounts to deficiency in service on their part. We do not find any material irregularity in the order passed by the District Forum. There is no ground or justification for admitting the appeal and issuing notice to the respondent/complainant.

13. Accordingly, the appeal is dismissed in limine and the impugned order is upheld. ……"

10. Hence, the present Revision Petition has been filed by the Petitioners/ Opposite Parties against the above mentioned impugned order of the Ld. State Commission on the grounds that:

The impugned order is arbitrary and contrary to the settled principles of law as laid down by Hon'ble Supreme Court and this Commission;

The Ld. State Commission ignored the fact that it is a settled principle of law that it is the duty of the insured person to provide true and correct information at the time of filing of the proposal as the Contracts of Insurance are governed by the principle of utmost good faith. And the order of State Commission and District Forum is contrary to the Doctrine of 'Uberrimae Fidei'. Further, the proposer at the time of filling the form gave undertaking and declaration. Reliance has been placed on 'Reliance Life Insurance Co. Ltd. v. Rekhaben Nareshbhai Rathore';

The orders passed by the Ld. State Commission and Ld. District Forum are contrary to the provisions of Insurance Act. The Petitioners were well within their right under section 45 of the Insurance Act to repudiate the claim;

The State Commission has wrongly upheld the order of District Forum by relying on the fact that non-verification of the Income tax Returns of the deceased cannot be said to be mis-declaration by the deceased. The State Commission failed to consider the Reply dated 22.04.2019 to the RTI filed by the Petitioners. The Reply proves the fact that the said income tax returns disclosed by the deceased in the proposal form were invalid; d.

The State Commission wrongly upheld the contention of the Respondent relied by the District Forum that the E-Income Tax Returns filed by the deceased on 04.03.2018 were to be verified with the Income Tax Department within six months therefrom and the deceased passed on 20.07.2018 before the expiry of six months. The Ld. State Commission failed to consider the document/ ITR-V already on record which clearly depicts that the Income Tax Return filed electronically has to be mandatorily verified within a period of 120 days from the date of electronic filing. As per record deceased passed on 02.07.2018 i.e. prior to expiry of period of 120 days. Further, no proof was ever placed on record by the Respondent to contradict the said period of 120 days and to substantiate the claim of six months period for verifying the E-returns; e.

The insurance policy was taken by the insured with the sole purpose of defrauding the Petitioners.

11. Heard Ld. Counsel for the Petitioner. Perused the material available on record.

12. Perusal of the Proposal Form submitted by the deceased which is a part of the Annexure 'E' goes to show that he had claimed his actual income to be Rs.4 Lakhs from "Business". The Proposal Form was submitted on 05/03/2018. The Income Tax Return of the deceased for the Assessment Years 2016-2017 and 2017-2018 (Annexure 'F' & 'G') go to show that in the first of those Assessment Years he had declared his Gross Total Income to be Rs.2,65,000/- which was enhanced to Rs.2,99,000/- in the following Assessment Year. Both the Returns were submitted online on 04/03/2018, which was just a day before he submitted his Insurance Proposal Form. As such there was a manifest misrepresentation of material facts, since he had projected his Income to be much above his actual Income disclosed in his Returns submitted online just a day earlier.

13. The Ld. State Commission did not find this to be of much consequence since it was of the view that the Insurance Company need not have accepted his Proposal Form without satisfying itself about the correctness of its contents. This is clearly an excessive and uncalled for indulgence in favour of the insured which is not in consonance with the settled law on the matter, which lays down that an Insurance Coverage is sought for and provided by scrupulously following the Principle of "Uberrimae Fidei", and every material fact must have to be truthful otherwise there would be a good ground for Rescission of the Contract. This Principle has been laid down by the Hon'ble Apex Court in various decisions such as "LIC Vs. G.M Channabasamma decided on 06/12/1990, (1991) 1 SCC 357", "LIC Vs. Asha Goel & Anr. Appeal Civil 4186-87 of 1988, decided on 13/12/2000" and "Satwant Kaur Sandhu Vs. New India Assurance Co. Ltd., IV (2009) CPJ8 (SC)".

14. Further, the guidelines issued by the IRDA do not provide anywhere that any such verification must have to be necessarily done especially in those cases where the premium amount itself is below Rs.1 Lakh per annum.

15. For the aforesaid reasons, this Commission finds merit in the submission raised on behalf of the Petitioner's Insurance Company and is therefore, of the view of that both the Ld. Fora acted with material irregularity in allowing Insurance Claim of the Complainant without properly appreciating the defence of the Insurance Company, that it was justified in repudiating the claim on account of wilful misrepresentation of facts on the part of the Insured about his Income, on the basis of which he had obtained the coverage to the extent of the sum assured.

16. Consequently, the Revision Petition is allowed after setting aside the decisions of both the Ld. Fora below. The Complaint filed by the Respondent accordingly stands dismissed.

17. No Orders as to costs.

18. Pending application(s), if any, also stand disposed off.

......................J

SUDIP AHLUWALIA

PRESIDING MEMBER