Dismissing an appeal and upholding an order of the Gujarat state consumer disputes redressal commission, the national consumer disputes redressal commission (NCDRC) directed HDFC Life Insurance Company Limited (formerly Exide Life Insurance) to pay Rs25 lakh along with interest and compensation to a widow whose husband’s death claim was wrongly rejected.
In an order last week, a bench comprising Dr Inder Jit Singh (presiding member) and Dr justice Sudhir Kumar Jain (member) ruled that the insurer had failed to prove any suppression of material facts by the deceased life assured (DLA) or policyholder, Kalaji Bhikhaji Marwadi, and that the repudiation of his wife Jumaben Kalaji Marwadi’s claim amounted to deficiency in service.
"No doubt, suppression of material facts with respect to pre-existing ailments entitles the insurance company to repudiate the claim, but as was held by the Supreme Court in Life Insurance Corporation of India Vs GM Channabasamma (1991), onus to prove suppression of such material facts lies on the Insurance Company. In the present case, other than the prescription dated 17 January 2012 of one Dr Ramesh M Vakharia, the insurance company has not placed on record any other evidence or documents with respect to any disease which the DLA was suffering or might have undergone treatment. This prescription, by no means, establish that the deceased was suffering from pre-existing diseases as alleged, as only certain tests have been advised along with some medication. No test reports and/or any medical treatment records have been placed on record. Hence, we are of the considered view that the insurance company has not been able to establish that the DLA was suffering from any diseases on or before the date of filling the proposal form and that the DLA suppressed any material fact relating to pre-existing disease(s) in the said proposal form," the NCDRC bench says.
The case is related to Kalaji Marwadi, who, on 7 January 2014, obtained a term life insurance policy from HDFC Life for a sum assured of Rs25 lakh by paying a premium of Rs9,587 for a 17-year term. The policy commenced on the same day and his wife Jumaben Marwadi was named as the nominee.
On 13 April 2014, merely three months after the policy began, Mr Marwadi suffered from vomiting and diarrhoea and was treated by Dr Naresh Kapadia. Despite two days of treatment, he passed away on 15 April 2014. His wife, Ms Marwadi informed the insurance company about her husband’s death and submitted the required documents for the claim. However, on 31 March 2015, the company repudiated the claim alleging that Mr Marwadi had failed to disclose material facts about his health, income and occupation at the time of purchasing the policy. The insurer further alleged that the deceased was a below poverty line (BPL) cardholder which, it said, had been concealed.
Following the repudiation, Ms Marwadi filed a complaint before the Gujarat state consumer commission in 2015, which partly allowed her complaint on 3 January 2025. The state commission directed HDFC Life to pay the full insured sum of Rs25 lakh with interest at 7%pa (per annum) from the date of complaint, Rs25,000 as compensation for mental agony and Rs25,000 towards litigation costs. It also directed that the order be complied with within 60 days, failing which an additional interest of 2%pa would apply. The state commission found that HDFC Life had not produced any credible evidence to support its claim that the deceased had suppressed facts.
The insurer’s repudiation relied primarily on a prescription dated 17 January 2012, issued by a Gandhinagar-based Dr Vakharia which mentioned a patient named 'Kalubhai' and advised certain tests. The insurer claimed that this prescription proved pre-existing illness. The state commission, however, found that HDFC Life had failed to establish that 'Kalubhai' referred to the deceased insured, Kalaji Marwadi. It noted that HDFC Life had not examined Dr Vakharia or produced any affidavit confirming the patient’s identity. The state commission further held that the insurer’s investigation was incomplete and based on assumptions rather than verified evidence.
The state commission also rejected the insurer’s contention that the deceased had falsified his income. It observed that the deceased had submitted income tax returns (ITRs) filed a day before the proposal date and unless proven false by competent authorities, the insurer could not dismiss them as fabricated.
The state commission says that the insurer’s reliance on hearsay statements and unverified information gathered by its investigator was insufficient to justify repudiation. Importantly, it held that the proposal form did not contain any question regarding BPL status and therefore, the insured was under no obligation to disclose it. The state commission also ruled that holding a BPL card did not automatically imply false disclosure of income or render the insurance contract void.
Aggrieved by the decision, HDFC Life approached the NCDRC, contending that the state commission’s order was arbitrary and contrary to settled principles of insurance law. The insurer claimed that Mr Marwadi, the deceased, had misrepresented his health, education and financial status and that the complaint had been adjudicated after an 'unexplained delay' of over nine years. It relied on several judgements from the Supreme Court to argue that insurance contracts are based on utmost good faith and that suppression of facts invalidates a policy.
After hearing the arguments, the NCDRC bench upheld the Gujarat state commission’s findings, holding that the insurer had not discharged the burden of proof required to justify claim repudiation. The bench referred to the Supreme Court’s ruling which established that the onus to prove suppression of material facts lies squarely on the insurer.
NCDRC observed that apart from a single prescription from 2012, there was no medical record indicating that Mr Marwadi was suffering from any illness at the time of purchasing the policy. It noted that the insurer’s investigation report lacked authenticity and that no corroborating documents or witness statements were placed on record.
The national forum also agreed with the state commission’s view that being a BPL cardholder was irrelevant since no such question was asked in the proposal form. It held that the deceased had duly declared his annual income of Rs199,600, and there was no material proof of misrepresentation.
NCDRC remarked that the insurer’s reliance on assumptions rather than concrete evidence reflected a lack of due diligence. “The insurance company has not been able to establish that the deceased was suffering from any disease on or before the date of filling the proposal form,” the bench observed.
Dismissing the appeal, NCDRC concluded that the Gujarat state commission had passed a 'well-reasoned order' and that there was no reason to interfere with it. “We are of the considered view that the state commission has passed a well-reasoned order and we do not see any reason to interfere with its findings. Accordingly, the order of the state commission is upheld and the appeal stands dismissed,” the bench held.
With the dismissal of the appeal, HDFC Life must now pay the full claim amount of Rs25 lakh with interest and compensation as directed earlier. The ruling reinforces the principle that insurance companies cannot repudiate claims without solid evidence and must act with fairness and good faith when dealing with policyholders and their families. The decision also serves as a reminder of the consumer commissions’ growing scrutiny of insurers’ practices in denying legitimate claims.
(Case No: FA/179/2025 Date: 16 October 2025)
