Telangana High Court
Cheemala Nagendra Babu vs Sbi Life Insurance Co. Ltd on 26 February, 2024
Author: Surepalli Nanda
Bench: Surepalli Nanda
IN THE HIGH COURT OF TELANGANA AT HYDERABAD
W.P.No.42237 OF 2022
Between:
Cheemala Nagendra Babu
... Petitioner
And
SBI Life Insurance Company Limited & another
... Respondents
JUDGMENT PRONOUNCED ON: 26.02.2024
THE HON'BLE MRS JUSTICE SUREPALLI NANDA
1. Whether Reporters of Local newspapers : Yes
may be allowed to see the Judgment?
2. Whether the copies of judgment may be : Yes
marked to Law Reporters/Journals?
3. Whether Their Lordships wish to : Yes
see the fair copy of the Judgment?
________________
SUREPALLI NANDA, J
2
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WP No.42237_2022
THE HON'BLE MRS JUSTICE SUREPALLI NANDA
W.P.No.42237 OF 2022
% 26.02.2024
Between:
# Cheemala Nagendra Babu
... Petitioner
And
$ SBI Life Insurance Company Limited & another
... Respondents
< Gist:
> Head Note:
! Counsel for the Petitioner : Mr. Ramesh Bura
^ Counsel for Respondent : Mr. Srinivas Karra
? Cases Referred:
(1) (2008) 1 SCC 321
(2) (2001) 2 SCC 160
3
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WP No.42237_2022
HON'BLE MRS JUSTICE SUREPALLI NANDA
W.P. No. 42237 of 2022
ORDER:
Heard Mr.Ramesh Bura, learned counsel appearing
on behalf of the Petitioner and Mr. Srinivas Karra,
learned counsel appearing on behalf of the respondents.
2. PRAYER :
Petitioner approached the Court seeking prayer as
under :
"To issue Writ order or direction more in the
nature of Mandamus declaring the impugned Ref:
4334212/OPS/22-23/CL/R/93941 Dated:04/07/2022
issued by Respondents, repudiating the insurance death
claim, under the Policy No.1G401794406 on the life of
Late Cheemala Ramaswamy under plan UIN:
111N089V03, on the ground of 'suppression of material
fact', is illegal, arbitrary and violation of Articles 14 and
21 of Constitution of India and consequently set aside
the impugned Ref:4334212/OPS/22-23/CL/R/93941
Dated: 04.07.2022 issued by Respondents and direct
the Respondents to release the insurance claim to the
petitioner with simple interest at the rate of 18 percent
per annum in the interest of justice."
3. PERUSED THE RECORD :
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WP No.42237_2022
The order impugned dated 04.07.2022 issued by
the Respondents vide Ref. 4334212/OPS/22-23/CL/R/
93941, reads as under:
"This is with reference to your claim under the policy
no.1G401794406 on the life of Late Cheemala
Ramaswamy. We are sad to note the unfortunate
demise of Late Cheemala Ramaswamy.
On scrutiny of claim documents, we have noted that in
the proposal for insurance dated 19/10/2019, Late
Cheemala Ramaswamy had answered the questions in
the proposal form as follows:
Do you have any other individual life insurance policy (from SBI Life or any other life insurer) or Yes
have you applied for one?
Name of Policy/ Year Product/ Medical Yearly Sum Self/Spouse/ Policy
Insurance Proposal of Plan/Rider/ (Y/N) Premium Assured Parent Status
Company Issue Option (Rs.) (Rs. (Pls.specify)
ICICI 44130995 2019 ICICI Pru Y 20233 Rs.10000000 Self In
PRUDENTIAL Improtect Force
smart
But Late Cheemala Ramaswamy had not disclosed
details of Policy availed from Exide Life Insurance
Company in 2018.
Life insurance contract is a contract of utmost good
faith. This policy was issued on the basis of the
information disclosed in the proposal form believing the
information to be true. However, we have sufficient
evidence to prove that Late Cheemala Ramaswamy had
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not disclosed details of other Life insurance policy held
by him at the time of submission of the proposal form.
As these material facts were not disclosed in the
proposal form, the claim is hereby repudiated on the
grounds of suppression of material facts.
Please note that an amount of Rs.54720/- (Fifty Four
Thousand Seven Hundred Twenty Only) has been
transferred to your saving account no: ***4063 held in
State Bank Of India, NRI Branch Khammam branch, on
29/06/2022, as per terms and conditions of the policy.
In case, you are not satisfied with the above decision
and feel that we have not considered any particular facts
and circumstances in support of your claim, you may
send your representation for re-consideration of your
claim to our Claims Review Committee, situated at the
following address:
Head Claims, SBI Life Insurance Co.Ltd, 8th Level,
Seawoods Grand Central, Tower 2, Plot No.R-1, Sector -
40, Seawoods, Nerul Node, Navi Mumbai-400706.
The decision taken by the Committee would be
communicated to you.
Thanking You,
Yours sincerely,
AVP - Claims, SBI Life Insurance Company Ltd.
Ph:022-66456509, [email protected]
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WP No.42237_2022
This is a system generated letter and does not require
any signature."
4. Counter affidavit filed by the Respondents, in
particular, Paras 4 to 10 read as under :
4. It is submitted that the Deceased Life Assured,
Mr.Cheemala Ramaswamy (hereinafter referred to as the
"DLA") had applied for SBI Life -E Shield- Level Term
vide proposal bearing No.1GPZ073593 dated
19/10/2019. A copy of the proposal form is appended
as ANNEXURE-A. That in reply to the question in the
proposal form, 'Do you have any other Individual life
insurance policy or have you applied for one?', the DLA
disclosed details of insurance policy with ICICI
prudential life insurance Company Ltd with Rs.1 crore
cover only. In this context it is submitted that in the
proposal form, it was declared that the answers and
particulars given by him are true and complete in all
respects to the best of my knowledge.
5. It is submitted that on the basis of the information
furnished in the proposal form and relying on the
information to be true and accurate, the proposal form
was accepted and SBI Life-E shield policy bearing
No.1G401794406 was issued with date of
commencement 31.10.2019 for the Basic Sum Assured
of Rs.1 crore for a term of 7 years. A copy of the policy
document is appended as ANNEXURE-B.
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6. It is submitted that Mr.Cheemala Ramaswamy is
reported to have died on 15.01.2022. The claim
intimation was received on 04.04.2022. A copy of the
claim intimation is appended as ANNEXURE-C.
7. It is submitted that during the assessment of
claim, it was revealed that the DLA was holding policy of
Exide Life Insurance with risk commencement dated as
04.03.2018 for a sum assured of Rs.82 lakhs. Further, a
confirmation was taken recently from Exide life
insurance recently. Copies of mail received from Exide
life is appended as ANNEXURE-D colly.
8. It is submitted that as the DLA did not disclose the
details of his previous life insurance policy of Rs.82
lakhs, the Answering Respondent was deprived of a
chance to properly assess the risk on the life of the DLA.
Thus, the answer to the question in the proposal form
regarding existing proposal/policies for life insurance is
very vital for the proper assessment of risk by the
Company.
9. Thus it is clear that the DLA had committed a breach
of doctrine of Utmost Good Faith by not disclosing the
details regarding the existing insurance policy and
thereby availed the insurance cover fraudulently from
the Answering Respondent. The amount of insurance
cover to be granted depends on the human life value of
the individual to be insured. Any disproportionate
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insurance will increase the moral hazard and a question
arises with regard to the insurable interest. The details
of the insurance cover proposed is a vital fact for
assessing risk and sum assured that can be granted
under the insurance policy. Any disproportionate
insurance cover will affect the insurer adversely. It is
submitted that any suppression of material facts in the
proposal form will render the insurance cover invalid in
respect of the insured. Details of existing life insurance
policy by the proposer helps the Insurance Company to
determine whether the sum assured proposed is
commensurate with his/her standard of living and
earning capacity. If the proposer misstates his/her
existing Insurance details and obtains the insurance
cover fraudulently, any subsequent revelation of
mis-statement or suppression of existing insurance
details would render the insurance cover void ab initio.
In such circumstances, the Insurer is well within its
contractual rights to repudiate the death claim.
10. It is therefore this insurance company repudiated
the claim under the policy and an amount of Rs.54,720/-
was refunded on 29.06.2022 to the nominee's account.
The same has been informed to the complainant vide
letter dated 04.07.2022. A copy of the claim repudiation
letter is appended as ANNEXURE-E."
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5. Case of the Petitioner as per the averments made
in the affidavit filed in support of the Writ Petition is as
under :-
a. The father of the Petitioner namely Late Cheemala
Ramaswamy worked as Line Inspector at TSNPDCL. He
took life insurance policy (SBI Life-e-Shield Level
Cover) Policy No.1G40179446, proposal
No.IGPZO73593, dated 19.10.2019 with the
Respondents SBI Life Insurance Corporation Limited for
Sum assured of Rs.1,00,00,000/-. The total premium
amount per annum is Rs.21,524/-. The Petitioner is the
said nominee in the said policy and the father of the
Petitioner namely Late Cheemala Ramaswamy died on
15.01.2022 who is the Deceased/Insured.
b. It is further the case of the Petitioner that when
the Petitioner claimed the Death Claim, Respondents
Corporation repudiated the Insurance claim on the
ground of suppression of material facts vide
Ref.4334212/OPS/22-23/CL/R/93941, dated
04.07.2022. The Respondents Corporation alleged that
the Deceased/Insured name Late Cheemala
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Ramaswamy had not disclosed details of Policy availed
from Exide Life Insurance Company in 2018. Aggrieved
by the same the Petitioner filed the present writ
petition.
6. The learned counsel appearing on behalf of the
Petitioner mainly puts forth the following submissions :
i. The Deceased/Insured namely the father of
the Petitioner Late Cheemala Ramaswamy did not
suppress the previous Insurance Policies.
ii. The Insurance Agent had filled up the Online
proposal form by following instructions of the Online
Executive of the Respondents Insurance Corporation.
iii. In the proposal for Insurance dated
19.10.2019 the Deceased/Insured namely late
Cheemala Ramaswamy replied to a question in the
proposal form as follows :
Question Answer of the
Deceased/Insured
Do you have any individual life Yes
insurance policy (from SBI Life
or any other life insurer) or
have you applied for one?
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WP No.42237_2022
iv. The Insurance Proposal Form did not ask
further question regarding the details of the previous
proposals of policies and there was no question posed
to the Petitioner to furnish the details of the proposals
of the Insurance policies.
v. Though the proposal form did not consist a
specific query to furnish the details of proposals of
insurance policies, yet in fact the Petitioner himself
gave the details of ICICI Prudential Policy No.44130995
as example, but however, on the ground that the
Deceased/Insured late Cheemala Ramaswamy had
another policy availed from Exide Life Insurance
Company in 2018 which was not disclosed by him, the
Respondents had issued the order impugned dated
04.07.2022 against the Petitioner who is the nominee of
the said policy in the capacity of Son of the
Deceased/Insured namely Late Cheemala Ramaswamy.
vi. There is no suppression on the part of the
Deceased/Insured since late Cheemala Ramaswamy
rightly answered as 'Yes' to the specific query in the
proposal form and the Deceased/Insured had no
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intention to suppress fact of policy availed from Exide
Life Insurance Company since the meaning of "non-
disclosed" cannot be equated with the word
suppression.
7. On the basis of the above said pleas the Learned
Counsel for the Petitioner contended that it is false to
say that there was suppression of material fact by late
Cheemala Ramaswamy under Plan UIN:111N089V03
under the Policy No.1G401794406 and contended that
therefore the Writ Petition should be allowed as prayed
for since the order impugned is in clear violation of
Article 14 and 21 of the Constitution of India.
8. The Learned Counsel appearing on behalf of the
Respondents placing reliance in the averments made in
the Counter Affidavit filed on behalf of the Respondents
mainly puts forth the following submissions :
i. Mr. Cheemala Ramaswamy died on
15.01.2022 and the claim intimation is
received on 04.04.2022 and during the
assessment of the claim it was revealed that
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the Deceased Life Assured, Mr. Cheemala
Ramaswamy who had applied for SBI Life-E
Shield-Level Term vide Proposal bearing No.
1GPZ073593, dated 19.10.2019, was holding
Policy of Exide Life Insurance with risk
commencement date as 04.03.2018 for a sum
assured of Rs.82 lakhs and since the
deceased life assured Mr. Cheemala
Ramaswamy did not disclose the details of
his previous life insurance policy of Rs.82
lakhs, the Respondents were deprived of a
chance to properly assess the risk on the life
of the deceased life assured and hence the
deceased life assured had committed a
breach of Doctrine of Utmost Good Faith by
not disclosing the details regarding the
existing insurance policy and thereby availed
the insurance cover fraudulently from the
Respondents.
ii. Any suppression of material facts in the
proposal form will render the insurance cover
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invalid in respect of the insured and hence
the insurer is well within its contractual
rights to repudiate the death claim and
accordingly the Insurance Company
repudiated the claim under the policy and an
amount of Rs.54,720/- was refunded on
29.06.2022 to the nominee's account and the
same was informed to the complainant vide
letter dated 04.07.2022.
iii. The Petitioner bypassed alternative remedies
like filing complaint before Consumer Forum,
Civil Court and approached the Court by filing
the present writ petition.
iv. The learned counsel appearing on behalf of
the Respondents based on the aforesaid
submissions contended that the action to
repudiate the claim is as per the terms and
conditions of the policy and the prayer of the
Petitioner is not tenable and hence the writ
petition has to be dismissed.
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DISCUSSION AND CONCLUSION
9. Section 45 of the Insurance Act reads as under :
"Section 45. Policy not to be called in question on
ground of mis-statement after two years.
(1) No policy of life insurance shall be called in question
on any ground whatsoever after the expiry of three
years from the date of the policy, i.e., from the date of
issuance of the policy or the date of commencement of
risk or the date of revival of the policy or the date of the
rider to the policy, whichever is later.
(2) A policy of life insurance may be called in question
at any time within three years from the date of issuance
of the policy or the date of commencement of risk or
the date of revival of the policy or the date of the rider
to the policy, whichever is later, on the ground of fraud:
Provided that the insurer shall have to communicate in
writing to the insured or the legal representatives or
nominees or assignees of the insured the grounds and
materials on which such decision is based.
Explanation I. --For the purposes of this sub-section,
the expression "fraud" means any of the following acts
committed by the insured or by his agent, with intent to
deceive the insurer or to induce the insurer to issue a
life insurance policy: --
(a) the suggestion, as a fact of that which is not true
and which the insured does not believe to be
true;
(b) the active concealment of a fact by the insured
having knowledge or belief of the fact;
(c) any other act fitted to deceive; and
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(d) any such act or omission as the law specially
declares to be fraudulent.
Explanation II. --Mere silence as to facts likely to affect
the assessment of the risk by the insurer is not fraud,
unless the circumstances of the case are such that
regard being had to them, it is the duty of the insured
or his agent keeping silence, to speak, or unless his
silence is, in itself, equivalent to speak.
(3) Notwithstanding anything contained in sub-
section (2), no insurer shall repudiate a life insurance
policy on the ground of fraud if the insured can prove
that the misstatement of or suppression of a material
fact was true to the best of his knowledge and belief or
that there was no deliberate intention to suppress the
fact or that such misstatement of or suppression of a
material fact are within the knowledge of the insurer:
Provided that in case of fraud, the onus of disproving
lies upon the beneficiaries, in case the policyholder is
not alive.
Explanation. --A person who solicits and negotiates a
contract of insurance shall be deemed for the purpose of
the formation of the contract, to be the agent of the
insurer.
(4) A policy of life insurance may be called in question
at any time within three years from the date of issuance
of the policy or the date of commencement of risk or
the date of revival of the policy or the date of the rider
to the policy, whichever is later, on the ground that any
statement of or suppression of a fact material to the
expectancy of the life of the insured was incorrectly
made in the proposal or other document on the basis of
which the policy was issued or revived or rider issued:
Provided that the insurer shall have to communicate in
writing to the insured or the legal representatives or
nominees or assignees of the insured the grounds and
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materials on which such decision to repudiate the policy
of life insurance is based:
Provided further that in case of repudiation of the policy
on the ground of misstatement or suppression of a
material fact, and not on the ground of fraud, the
premiums collected on the policy till the date of
repudiation shall be paid to the insured or the legal
representatives or nominees or assignees of the insured
within a period of ninety days from the date of such
repudiation.
Explanation. --For the purposes of this sub-section, the
misstatement of or suppression of fact shall not be
considered material unless it has a direct bearing on the
risk undertaken by the insurer, the onus is on the
insurer to show that had the insurer been aware of the
said fact no life insurance policy would have been issued
to the insured.
(5) Nothing in this section shall prevent the insurer from
calling for proof of age at any time if he is entitled to do
so, and no policy shall be deemed to be called in
question merely because the terms of the policy are
adjusted on subsequent proof that the age of the life
insured was incorrectly stated in the proposal.]"
10. A bare perusal of the aforesaid section indicates
that the same is restrictive in nature and is based on 3
conditions for applicability of the second part of the
section namely :
(a) the statement must be on a material matter or
must suppress facts which it was material to disclose;
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(b) the suppression must be fraudulently made by
the policy-holder; and
(c) the policy-holder must have known at the time
of making the statement that it was false or that it
suppressed facts which it was material to disclose.
11. A bare perusal of the order impugned dated
04.07.2022, referred to and extracted above, issued to
the Petitioner by the Respondents indicates that the
only ground for issuing the said impugned order against
the Deceased/Insured late Cheemala Ramaswamy is
that the said person had not disclosed details of other
life insurance policy held by him at the time of
submission of the proposal form and since this material
fact was not disclosed in the proposal form by him,
hence his claim had been repudiated on the ground of
suppression of material facts.
12. This Court opines that it is true that non-disclosure
of any material particular or material information can
entitle the Respondents to invalidate the policy and
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forfeit the premium, however the said clause has to be
read in a reasonable manner.
13. The Apex Court in the judgment reported in
(2008) 1 SCC 321 in P.C. Chacko and Another Vs.
Chairman, Life Insurance Corporation of India & Others
held in relation to Sec.45 of the Insurance Act, 1938
that misstatement by itself was not material for
repudiation of the policy unless the same is material in
nature, a proposal can be repudiated if a fraudulent act
is discovered.
14. The Apex Court in the judgment reported in
(2001) 2 SCC 160 in Life Insurance Corporation of India
& Others Vs. Asha Goel (Smt. & Another) observed in its
head note at para 10 as under :
"Para 10 : Article 226 of the Constitution confers
extraordinary jurisdiction on the High Court to
issue high prerogative writs for enforcement of
the fundamental rights or for any other purpose. It
is wide and expansive. The Constitution does not
place any fetters on exercise of the extraordinary
jurisdiction. It is left to the discretion of the High
Court. Therefore, it cannot be laid down as a
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general proposition of law that in no case the High
Court can entertain a writ petition under Article
226 of the Constitution to enforce a claim under a
life insurance policy. It is neither possible nor
proper to enumerate exhaustively the
circumstances in which such a claim can or cannot
be enforced by filing a writ petition. The
determination of the question depends on
consideration of several factors like, whether a
writ petitioner is merely attempting to enforce
his/her contractual rights or the case raises
important questions of law and constitutional
issues, the nature of the dispute raised; the nature
of inquiry necessary for determination of the
dispute etc. The matter is to be considered in the
facts and circumstances of each case."
15. This Court opines that the Deceased/Insured in all
fairness answered as 'yes' to the specific query i.e., the
query 'do you have any individual life policy' (from SBI
Life or any other life insurer) or have you applied for
one? And since there was no query in the proposal
form if 'yes' to give the details of the proposals of the
insurance policies, the Deceased/Insured had not
stated the details of other life insurance policy held by
him at the time of submission of the proposal form and
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hence the Respondents herein cannot avoid the policy
on ground of misstatement of the said facts.
16. This Court is of the firm opinion that the
Deceased/Insured late Cheemala Ramaswamy
furnished an answer 'yes' to the specific query asked
for in the proposal form and discharged his solemn
obligation to make a true and full disclosure of the
information on the subject which is within his
knowledge, but however, since there was no query to
give the details of the proposals of insurance policies he
did not disclose the same. This Court is of the firm
opinion that the Deceased/Insured late Cheemala
Ramaswamy having given the details of ICICI
Prudential Policy No.44130995 on his own though there
was no query in the proposal form to give the details of
the proposals of the insurance policies had no any
mala fide intention to suppress his another policy
availed from Exide Life Insurance Policy in 2018 year or
to play any fraud and infact the burden of proof is on
the insurer to establish the same and unless the insurer
is able to do so there is no question of the policy being
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avoided on the ground of misstatement of facts or
suppression of facts.
17. Taking into consideration the above said facts and
circumstances of the case and the law laid down by the
Apex Court in the judgment reported in (2001) 2 SCC
160, referred to and extracted above, this Court opines
that the order impugned is passed mechanically without
assigning any reasons in the impugned order dated
04.07.2022 vide Ref. 4334212/OPS/22-23/CL/R/
93941 issued by the Respondents, except stating that
late Cheemala Ramaswamy had not disclosed the
details of other life insurance policy held by him at the
time of submission of his proposal form when
admittedly the proposal form itself did not indicate such
a query/question to be answered by the applicant,
hence the Writ Petition is allowed, the impugned order
dated 04.07.2022 vide Ref. 4334212/OPS/22-
23/CL/R/93941 issued by the Respondents is set aside
and the matter is remitted back to the Respondents to
reconsider the Petitioner's claim under the Policy
No.1G401794406 on the life of late Cheemala
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Ramaswamy under plan UIN:111N089V03 within a
period of 2 weeks from the date of receipt of the copy of
the order in accordance to law, in conformity with
principles of natural justice, by giving reasonable
opportunity to the Petitioner, taking into consideration
the observations of this Court made in the present order
and duly communicate the decision to the Petitioner.
However, there shall be no order as to costs.
Miscellaneous petitions, if any pending, in this writ
petition shall stand closed.
__________________
SUREPALLI NANDA, J
Date: 26.02.2024
Note : L.R. Copy to be marked.
B/o.Yvkr
