Karnataka HC Upholds LIC’s Rejection Of Husband’s ₹1.01-Crore Claim Over Wife’s False Health Declarations

In brief

The question

Whether the State and National Commissions’ orders disclosed an error warranting interference under Article 227.

The court held

The Court held that the concurrent orders disclosed no ground for intervention under Article 227 and dismissed the writ petition.

It also directed

The State Commission’s direction to refund Rs. 5,42,188 with interest and pay Rs. 10,000 in litigation expenses therefore remained undisturbed.

01Facts

On 14 July 2020, the petitioner’s wife obtained a life insurance policy from LIC.

¶ 2

She died on 30 June 2022, and LIC repudiated the petitioner’s claim, stating that the proposal form contained false answers about her medical history, including prior myocardial infarction, diabetes, hypertension, hypothyroidism and ovarian cancer.

¶ 11–12

The State Commission partly allowed the complaint, directing LIC to refund premiums of Rs. 5,42,188 with interest and pay Rs. 10,000 in litigation expenses; it did not award the claimed sum assured or damages.

¶ 3–4

The National Commission dismissed the petitioner’s appeal and affirmed that order.

¶ 5, 9

The petitioner then challenged the concurrent orders under Articles 226 and 227 of the Constitution.

¶ 5, 9

02Issues

i.Whether the State and National Commissions’ orders disclosed an error warranting interference under Article 227.

¶ 9–10

ii.Whether LIC could repudiate the claim for alleged non-disclosure or false answers about the insured’s medical history, notwithstanding the petitioner’s contention that the undisclosed conditions had no nexus with the cause of death.

¶ 6, 12–14

03Law Applied

The Court applied the supervisory limits of Article 227, relying on Radhey Shyam v. Chhabi Nath, which holds that the power is to be exercised sparingly to keep subordinate courts and tribunals within jurisdiction, not to correct mere errors, and is available in cases such as jurisdictional excess or failure causing grave injustice.

¶ 10

It also considered Section 45 of the Insurance Act, 1938, and the insurance-law doctrine of uberrimae fidei (utmost good faith): an insured must truthfully disclose material facts sought in the proposal form, and materiality is assessed by whether the information could affect a prudent insurer’s decision to accept the risk or set its terms.

¶ 12, 15

The Court relied on Reliance Life Insurance Co. Ltd. v. Rekhaben Nareshbhai Rathod and Manmohan Nanda v. United India Insurance Co. Ltd. for the disclosure duty and the significance of answers to specific proposal-form questions.

¶ 15–16

Provisions in the judgment · 1 · Linked ones open on LawLens

Insurance Act, 1938 Section 45

04Reasoning

The proposal form asked specific questions about the insured’s health and medical history, and the Court found that the answers recorded as “No” were false in light of the hospital records relied on by LIC.

¶ 11–12

It rejected the argument that repudiation was impermissible because the undisclosed illnesses had no connection to the cause of death: in its view, the insured was required to provide truthful answers to the questions asked, and the insurer needed that information to assess whether, and on what terms, to accept the risk.

¶ 12–14

Finding no basis to reappreciate the concurrent factual conclusions in the limited supervisory jurisdiction under Article 227, the Court declined to interfere.

¶ 9, 16–17