In a significant order reaffirming consumer rights and protection against arbitrary insurance claim denials, the national consumer disputes redressal commission (NCDRC) has dismissed a revision petition filed by SBI Life Insurance Company Ltd (SBI Life). The insurer had contested earlier orders directing it to pay Rs5 lakh to Madireddy Nagamani, widow of the deceased policyholder Rama Mohana Reddy.
The commission found no merit in SBI Life’s arguments, stating that the insurer’s repudiation of the claim—on the grounds of alleged non-disclosure of a prior cancer diagnosis—was unjustified, as the insured died due to an accidental head injury unrelated to the claimed pre-existing illness.
"It is an undisputed fact that the death of Mr Reddy occurred due to accidental head injury sustained while coming down from the stairs. This fact was also recorded in the police report and corroborated by the final police report dated 27 August 2012. Therefore, the cause of death was not related to the alleged suppression of illness, i.e., lung cancer, and hence there was no casual (causal) connection between the alleged non-disclosure and the cause of death," says the bench of Binoy Kumar (presiding member) and justice Saroj Yadav (member).
The dispute arose after Mr Reddy, who had subscribed to SBI’s swadhan group insurance scheme with a sum assured of Rs2.5 lakh, died on 20 May 2012 following a fall from the roof of his home. His widow, the nominee, filed a claim under the policy. However, SBI Life rejected the claim on 28 November 2012, alleging that Mr Reddy had suppressed the fact that he was suffering from lung cancer prior to enrolling in the policy.
The death was investigated and recorded by the local police under section 174 of the Code of Criminal Procedure (CrPC) and the final report confirmed head injury as the cause of death.
Feeling aggrieved by the insurer's decision, Ms Nagamani approached the district consumer forum in Krishna district in Andhra Pradesh (AP), seeking Rs5 lakh in policy benefits, Rs50,000 compensation for mental agony and Rs5,000 in legal costs.
In its order dated 30 September 2015, the district forum allowed the complaint partially, directing SBI Life to pay Rs5 lakh along with rider benefits and 9% interest from the date of repudiation. The forum also awarded Rs2,000 towards costs.
SBI Life then appealed to the AP state consumer disputes redressal commission. The state commission upheld the district forum's order on 20 June 2019, stating that the insurance company’s ground for claim repudiation 'fell outside the purview' of the policy's exclusions.
The state commission clarified that, since the policy promised a benefit of Rs2.5 lakh in case of accidental death, and Mr Reddy’s death was indeed accidental, his nominee was entitled to the full benefit—doubled to Rs5 lakh under the scheme terms. It added that the insurer’s decision to reject the claim lacked justification.
Challenging both earlier rulings, SBI Life filed a revision petition before NCDRC under Section 21(b) of the Consumer Protection Act, 1986.
The insurer argued that the deceased had given a false declaration of good health and that the policy explicitly provided for nullification in case of misrepresentation. SBI Life cited the Supreme Court judgment in PC Chacko vs LIC (2008) to argue that suppression of material facts justified repudiation.
However, the NCDRC bench emphasised that there was no causal link between the alleged lung cancer and the insured's accidental death. The commission further noted that SBI Life had already raised and failed on the same grounds before the district and state forums.
Quoting multiple Supreme Court rulings, NCDRC reiterated that its revisional jurisdiction is limited and cannot be used to re-examine factual findings unless there is a material irregularity or jurisdictional error.
Relying on precedents such as Sulbha Prakash Motegaonkar vs LIC (2015) and Neelam Chopra vs LIC (2018), the commission stated that suppression of a medical condition not related to the cause of death cannot be the sole ground for denying a claim.
“Since the death was clearly accidental and verified as such by official investigation, and the alleged illness did not contribute to or cause the death, the insurer’s repudiation lacks merit,” the order says.
NCDRC dismissed the revision petition on 23 June 2025, reinforcing the principle that insurance companies cannot deny claims arbitrarily when the cause of death is independent of any alleged pre-existing conditions.
The commission also reminded insurers of the limited scope of revisional power and emphasised the importance of fair play, especially in cases involving bereaved families.
This ruling is expected to influence similar insurance disputes where claims are rejected on tenuous grounds of pre-existing conditions, despite clear unrelated causes of death. Consumer advocates have hailed the order as a ‘strong message’ to insurers on ethical conduct and fair policy enforcement.
(Revision Petition No. NC/RP/1590/2019 Date: 23 June 2025)
