Top court dismisses claim of man who didn’t reveal to LIC that he had heart ailment since childhood

Failure on the part of a person to reveal past history of disease is a valid ground for repudiation of his insurance policy benefits, the Supreme Court has held.

The recent judgment by a Bench led by Justice D.Y. Chandrachud was on the basis of an appeal filed by the Life Insurance Corporation of India against a 2018 order of the National Consumer Disputes Redressal Commission which confirmed a payment of over ₹2 lakh to the health policy holder, Manish Gupta.

The apex court concluded that Mr. Gupta failed to disclose to the insurance company that he had a past history of cardiovascular disease in the policy documents in 2008.

Referring to past precedents, Justice Chandrachud observed that “when an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge”.

It is not for a person to pick and choose what he should reveal or not in a policy form.

“It is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not. Of course, obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known. The obligation to disclose necessarily depends upon the knowledge one possesses. His opinion of the materiality of that knowledge is of no moment,” the Supreme Court reiterated.

The Bench found that the consumer fora made a “fundamental error in allowing the claim for reimbursement of medical expenses in the face of the uncontroverted material on record”.

“The documentary material indicates that there was a clear failure on the part of the respondent to disclose that he had suffered from rheumatic heart disease since childhood,” the apex court recorded in its order.

The District Consumer Disputes Redressal Forum, Ambala, had directed the company to pay a sum of ₹2,21,990, together with interest at the rate of 9% per annum from October 29, 2009, which is the date on which the claim was repudiated. Compensation of ₹10,000 was awarded towards mental harassment and ₹10,000 towards litigation expenses. Both the State and the National Consumer fora had upheld the order.

The apex court however set aside the orders and allowed the company’s appeal before it.