Kurnool Consumer Commission Directs HDFC Life To Pay ₹50 Lakh Insurance Claim; Holds Ambiguity In Proposal Form Questions Must Be Construed Against Insurer
The District Consumer Disputes Redressal Commission, Kurnool, comprising Sri Karanam Kishore Kumar (President), Sri N. Narayana Reddy (Member), and Smt. S. Nazima Kausar (Member), has directed HDFC Life Insurance Company Ltd. to pay a ₹50 lakh death claim, holding that an insurer cannot repudiate a claim based on alleged non-disclosure when the questions in the proposal form are ambiguous and unclear. The Commission held that any ambiguity in the proposal form must be construed against the insurer and in favour of the insured.
Facts
The complainant, Smt. Bonthala Sindhuja, is the wife and nominee of late Dr. G. Sravan Kumar, who was working as an ICU Duty Doctor. During his lifetime, he obtained an HDFC Life Click 2 Protect Super Policy with a sum assured of ₹50 lakh. The policy commenced on 15 October 2022 and the complainant was nominated as the beneficiary.
On 16 February 2024, while on night duty at a hospital, Dr. Sravan Kumar suffered a sudden cardiac arrest and passed away. Following his death, the complainant submitted a claim under the policy. However, HDFC Life repudiated the claim on the ground that the deceased had allegedly failed to disclose existing life insurance policies obtained from other insurance companies. The insurer's Claims Review Committee subsequently upheld the repudiation.
Aggrieved by the rejection of the claim, the complainant approached the Consumer Commission alleging deficiency in service and unfair trade practice.
Contentions of the Opposite Parties
The insurer contended that the insured had failed to disclose two existing life insurance policies issued by Kotak Life and Bharti AXA Life Insurance, each carrying a sum assured of approximately ₹1 crore. According to the insurer, the policy had been issued on the basis of the information furnished in the proposal form and would not have been issued had the previous policies been disclosed. It was argued that insurance contracts are governed by the principle of utmost good faith and that suppression of material facts rendered the policy voidable.
Observations and Decision
Upon examining the proposal form, the Commission found that the questions relied upon by the insurer were not framed with sufficient clarity. It noted that one question specifically asked whether the proposer had any existing HDFC Life policy, while the questions under the heading “Previous Policy Details” were couched in technical and composite language. The Commission observed that there was no clear and direct question requiring disclosure of all existing life insurance policies held with other insurers.
Applying the principle of contra proferentem, the Commission held that any ambiguity in the proposal form must be construed against the insurer, being the author of the document. It observed that in the absence of a specific, simple and unequivocal question requiring disclosure of all existing policies irrespective of the insurer, the answers furnished by the life assured could not readily be construed as deliberate or fraudulent suppression of material facts.
The Commission further observed that under Section 45 of the Insurance Act, 1938, the insurer bears the burden of establishing that any alleged suppression was material, fraudulent, and made with knowledge of its falsity. Mere non-disclosure in response to ambiguous questions could not be treated as fraudulent suppression. The Commission also relied on the Supreme Court's decisions in LIC of India v. Asha Goel and Satwant Kaur Sandhu v. New India Assurance Co. Ltd., which emphasize that repudiation of an insurance claim must be based on clear proof of material suppression.
It was further noted that the insured's death was a natural death caused by sudden cardiac arrest while he was on duty. The insurer failed to establish any nexus between the alleged non-disclosure and the cause of death. The Commission also found that the review conducted by the Claims Review Committee was mechanical in nature and did not adequately address the complainant's contentions.
Holding that the repudiation was arbitrary, legally unsustainable, and amounted to deficiency in service as well as unfair trade practice, the Commission partly allowed the complaint. It directed HDFC Life Insurance Company Ltd. to pay the assured sum of ₹50,00,000 to the complainant, along with ₹50,000 as compensation for mental agony and ₹10,000 towards litigation costs. The Commission further directed that the amounts be paid within 45 days, failing which they would carry interest at the rate of 12% per annum from 24 January 2025 until realization.
Case Title: Bonthala Sindhuja v. The Manager, HDFC Life Insurance Company Ltd. & Anr.
Case No.: Consumer Complaint No. 29 of 2025