Inability to prove fraudulent suppression of material disease after two years bars insurance claim repudiation.

The predecessor-in-interest of the petitioners, Krishna Kumar Borah, an Executive Engineer at ONGC, took a life insurance policy (No. 444061449) on 23.12.2010 with a sum assured of Rs. 20,00,000.

He expired on 14.02.2013 due to cardiorespiratory failure/cerebral hemorrhage.

The LIC (Respondents) repudiated the claim on 11.03.2015, alleging that the deceased suppressed material facts regarding his health in the proposal form (Question No. 11), specifically that he suffered from hypertension and had taken leave (EOL/HPL) for self-illness shortly before the policy commencement.

The petitioners challenged this repudiation as arbitrary, asserting the leaves were taken due to shock from a fatal accident involving a colleague and not a chronic illness.

1. Whether the repudiation of the insurance claim by LIC after the expiry of two years from the commencement of the policy was legally sustainable under Section 45 of the Insurance Act, 1938.

2. Whether the non-disclosure of temporary leave and alleged hypertension constituted "fraudulent suppression of material facts" sufficient to void the policy.

The court primarily applied Section 45 of the Insurance Act, 1938 (pre-2014 amendment version), which stipulates that no policy can be called into question after two years from the date of effect unless the insurer proves that a statement was material, suppressed fraudulently, and known by the policyholder to be false.

The court further relied on the principles from Anupama Behera v. Divisional Manager, LIC of India, which established that "materiality" is determined by whether the fact has a bearing on the risk undertaken; trivial ailments or temporary absences do not constitute fraudulent suppression.

The court noted that the policy had been in force for 2 years, 1 month, and 21 days before the insured's death, thereby triggering the restrictive protections of Section 45.

Consequently, the burden of proof shifted to LIC to establish "fraudulent suppression".

Upon reviewing the record, the court found that the deceased's leave from 11.11.2010 to 30.11.2010 was a result of mental shock from a colleague’s fatal accident, not a personal physical ailment.

The court observed that LIC failed to produce any medical evidence showing the deceased suffered from hypertension at the time the policy was taken in 2010.

Following the Anupama Behera doctrine, the court reasoned that minor or trivial health issues with no nexus to the ultimate cause of death or the risk assessment cannot be used to invalidate a contract of insurance.

The communication dated 11.03.2015 repudiating the claim was quashed and the Respondents were directed to release the assured sum to the petitioners within three months of the judgment.