Delhi Consumer Commission Holds LIC Liable For Wrongful Repudiation Of Insurance Claim
The Delhi State Consumer Disputes Redressal Commission, presided over by Justice Sangita Dhingra Sehgal (President) and Ms. Bimla Kumari (Member Judicial), held LIC of India liable for deficiency in service for wrongfully repudiating the insurance claim on unfounded allegations of non-disclosure and directed payment of the insured amount with interest from the date...
The Delhi State Consumer Disputes Redressal Commission, presided over by Justice Sangita Dhingra Sehgal (President) and Ms. Bimla Kumari (Member Judicial), held LIC of India liable for deficiency in service for wrongfully repudiating the insurance claim on unfounded allegations of non-disclosure and directed payment of the insured amount with interest from the date of repudiation.
Brief Facts of the Case:
The Appellant, Mrs. Shyama Razdan, is the nominee of her son, Mr. Vikram Razdan, who had purchased a LIC Jeevan Anand Policy for a sum assured of ₹8,00,000. The policy commenced on 28.09.2007and was to run for 21 years. On 15.02.2010, the policyholder passed away due to cardiac arrest at Batra Hospital.
The Appellant intimated LIC about the death on 02.12.2010, followed by a reminder on 07.02.2011, requesting settlement of the insurance claim. However, LIC repudiated the claim on 28.07.2011, alleging that the deceased had suppressed material information regarding his medical condition, specifically that he had a single kidney and was suffering from chronic kidney disease prior to taking the policy.
The Appellant disputed these allegations, asserting that her son was healthy at the time of submitting the proposal form and that the existence of a solitary kidney was discovered only after October–November 2007, well after the policy had commenced. She maintained that LIC failed to produce any credible medical evidence showing that the deceased had prior knowledge of kidney disease before the inception of the policy.
Due to the rejection of the claim, the Appellant filed Complaint before the District Consumer Commission on 25.07.2013. The District Commission, vide order dated 16.02.2024, held LIC guilty of deficiency in service and directed payment of the insured amount with interest and compensation. Challenging only the date from which interest was awarded, the Appellant filed First Appeal before the Delhi State Consumer Disputes Redressal Commission.
The Appellant argued that LIC wrongfully repudiated the insurance claim on an incorrect and unsubstantiated allegation that the deceased had a pre-existing kidney disease prior to taking the policy. She contended that her son was in good health at the time of submitting the proposal form and that neither he nor the family had any knowledge of a solitary kidney or renal issues before October–November 2007—after the policy had already commenced. She maintained that LIC relied only on hospital notes recorded during a later hospitalization, without producing any credible medical records proving prior illness or suppression of facts. The Appellant submitted that LIC failed to conduct or produce its own medical examination report from the time of issuing the policy. She further argued that the District Commission erred in awarding interest only from the date of filing the complaint and sought interest from the date of repudiation (28.07.2011)instead.
Contentions of the Respondent:
LIC contended that the claim had been correctly repudiated as the deceased had allegedly suppressed material facts about his health while filling the proposal form, particularly concerning chronic kidney disease. LIC argued that the deceased was undergoing treatment and had a known medical history, which should have been disclosed at the time of taking the policy. It maintained that the repudiation was justified and that the Appellant was not entitled to interest from the date of repudiation. LIC therefore prayed for dismissal of the appeal and supported the District Commission's decision on the interest component.
Observation and Decision of the Commission:
The Commission observed that the only issue in the appeal concerned the correct date from which interest should be awarded. Since LIC had repudiated the claim on 28.07.2011, and the repudiation letter was on record, the Commission held that interest must be calculated from that date, as per settled legal principles.
It agreed with the District Commission's finding that LIC had failed to prove any suppression of material facts by the deceased and that the repudiation of the claim amounted to deficiency in service. Therefore, while upholding the order on liability and compensation, the Commission modified it to direct LIC to pay ₹8,00,000 with 9% interest from 28.07.2011 until realisation.
The appeal was accordingly allowed in part, with all other directions remaining unchanged.
Case Title: Shyama Razdan vs. LIC of India
Case No.: First Appeal No. 247/2024