In a significant judgement, the national consumer disputes redressal commission (NCDRC) has directed ICICI Lombard General Insurance Company Ltd to pay Rs2.99 crore along with interest to a Mumbai-based widow, holding that the insurer had unfairly rejected her claim on technical and ambiguous grounds. NCDRC also ordered ICICI Bank Ltd to return the original property documents of the complainant’s home, failing which the lender will be liable to pay a penalty of Rs5,000 per day.
In an order issued earlier this month, the NCDRC bench comprising presiding member Subhash Chandra and member air vice-marshal (AVM) J Rajendra (retd) says, "...we are at the considered view that the complaint deserves to be allowed in part. ICICI Lombard General Insurance to directed to pay the complainant the amount due under home-loan insurance policy along with simple interest of 7%pa (per annum) from the date of repudiation of the claim on 8 February 2016 till the date of final payment, within a period of one month from the date of this order. In the event of delay, the interest rate applicable shall be at 10%pa. ICICI Bank is directed to return all the original documents of the flat to the complainant within a period of one month from the date of this order. In the event of delay, the lender will pay costs of Rs5,000 per day to the complainant. ICICI Lombard General Insurance is also directed to pay the complainant Rs50,000 as cost of litigation."
The case stems from a home loan taken by Hemamalini Darbha and her late husband, Gangadhar Darbha, in September 2014 from ICICI Bank. During the process, the branch manager of ICICI Bank informed them that, as 'high-value customers', they would receive a complimentary insurance cover for the full home loan amount of Rs3 crore from ICICI Lombard. They were introduced to a representative of ICICI Lombard, who quickly obtained Mr Darbha’s signature on blank forms, saying the details would be taken from the loan application. The sanctioned loan amount of Rs3.22 crore included Rs22.10 lakh as insurance premium which the Darbhas believed was free.
On raising objections, the bank manager and the ICICI Lombard representative assured them the premium payment was just a formality and would be adjusted later, as both the insurer and the bank belonged to the ICICI group. They were told the 'free insurance to the first applicant' would be reflected in the loan disbursement terms. Trusting these assurances, they agreed to the policy, after which Rs3 crore was disbursed to the flat’s seller and Rs22.10 lakh to the insurer.
Over the next year, they repaid nearly half the loan, with consistent equated monthly instalments (EMIs) and a one-time payment of Rs1 crore, bringing their total repayment to Rs1.31 crore by August 2015. From September that year, their EMI was reduced to Rs2.38 lakh.
Tragedy struck on 11 September 2015 when Mr Darbha suddenly collapsed at work due to a cerebro-vascular accident and died on the spot. Following his death, Ms Darbha submitted an insurance claim, expecting the sum assured of Rs2.99 crore. Despite her full cooperation in the claim process, including voluntarily providing her husband’s medical history and authorising hospital record releases, the insurance company repudiated the claim. The rejection was based on alleged non-disclosure of pre-existing medical conditions such as diabetes, hypertension, kidney disease and a history of dialysis.
ICICI Lombard claimed that the deceased had failed to disclose these health issues in the proposal form. However, Ms Darbha maintained that no such disclosures were ever requested. She stated that her husband was made to sign blank forms within the ICICI Bank branch and was told that the necessary details would be filled in using their loan application data. She further said they were never provided with the policy booklet nor made aware of the terms and exclusions of the insurance plan.
NCDRC, after examining the case and hearing both parties, found several discrepancies and service deficiencies on the part of the insurance company and the bank. It observed that the proposal form was poorly designed, with small fonts, vague instructions and no clear space for answering questions about medical history.
Citing the contra proferentem rule, the bench held that such ambiguity must be interpreted against the insurer. It further noted that ICICI Lombard never insisted on a medical examination before issuing a policy with a high sum assured and instead relied solely on the vague proposal form allegedly filled by the deceased.
NCDRC found that Ms Darbha had, in fact, acted in utmost good faith. Despite facing bereavement and financial pressure, she had continued paying EMIs and even closed the outstanding home loan in April 2016 by paying Rs2.11 crore. The bench further observed that she had voluntarily disclosed all relevant medical records post her husband's death, conduct that was consistent with good faith and not concealment.
NCDRC also referred to two recent Supreme Court rulings in Mahakali Sujatha vs Future Generali and Mahaveer Sharma vs Exide Life Insurance, which reiterated that the burden of proving fraudulent suppression of material facts lies squarely on the insurer, not the insured. The bench held that ICICI Lombard had failed to discharge this burden and that the rejection of the claim was not legally sustainable.
This judgement is seen as a stern warning to insurers and banks about the consequences of mis-selling and non-transparent dealings, especially when dealing with vulnerable consumers. The case highlights the importance of clarity in insurance contracts and reinforces the responsibility of financial institutions to act fairly and with full disclosure.
(Consumer Complaint No1384 of 2016 Date: 9 May 2025)
