Verdict

In the Supreme Court of India, Civil Appellate
Civil Appeal of 2025 arising from SLP No. 15354/2020

LIFE INSURANCE CORPORATION OF INDIA [LIC] . . . . . . . . . . . Appellant
V/s
SUNITA & OTHERS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Respondents 

On 3rd March 2025, the Supreme Court overruled the decision of the National Consumer Disputes Redressal Commission [NCDRC] order which had upheld the insurance claim of a person that was rejected by the insurance company.

Facts and Background

• On 28th March 2013, Mahipal, husband of Respondent [‘Sunita’], bought a ‘Jeevan Arogya’ policy of the Appellant Life Insurance Corporation of India [‘LIC’] of which Mahipal was the 1st insured and Sunita was the 2nd insured.
• Mahipal was a chronic alcoholic. On 2nd May 2014, he consulted a doctor in Siwach Hospital, Rohtak, Haryana and the prescription slip issued by this hospital indicates a history of chronic alcohol intake.   
• On 3rd May 2014, Mahipal was admitted with severe abdominal pain and vomiting to Sir Ganga Ram Hospital, Delhi, where he remained till 31st May 2014. Mahipal passed away on 1st June 2014.  
• While certain payments for the hospitalisation were paid by LIC, some more claims were rejected on grounds of concealment of vital information of Mahipal’s health. Sunita approached District Consumer Disputes Redressal Forum which ruled in her favour, directing LIC to settle the claim of Mahipal and Sunita.
• LIC challenged the District Forum’s ruling in State Consumer Disputes Redressal Commission [SCDRC] on grounds of false information provided by Mahipal and Sunita while taking the Policy. The SCDRC, however, upheld the District Forum’s ruling. 
• Aggrieved, the LIC approached the National Commission [NCDRC]. While relying on Supreme Court’s verdict in case Sulbha Prakash Motegaonkar & Others versus LIC [(2021) 13 SCC 561], the National Commission upheld rulings of the District Forum and the State Commission. It noted that he died of cardiac arrest which is unrelated to his existing Diabetes and Chronic Liver Disease.  
• Aggrieved, the LIC appealed to Supreme Court praying for dismissal of rulings given by the District Forum, SCDRC and NCDRC.

Issues

1. Does non-disclosure by insured person of his/her pre-existing medical condition provide sufficient grounds for rejection of his/her claims by the health insurance Policy provider? 
2. What are the circumstances under which such non-disclosure does not affect insured person’s entitlement  for a claim under the health insurance policy?

Analysis & Judgment  

• In pronouncing its judgement in the present case, Supreme Court referred to its own verdict in the case of Bajaj Allianz Life Insurance Co. Ltd. v/s Balbir Kaur [(2021) 13 SCC 553].
• In the case of Sulbha Prakash Motegaonkar & Others v/s LIC, insured person had pre-existing ‘lumbar spondylitis’ (disorder affecting lower spine) which he did not disclose while taking the policy, whereas he died of ‘myocardial infarction’ (a heart disorder) which is totally unrelated to the undisclosed pre-existing condition. Also, the pre-existing condition was not a life threatening one. On these grounds, the Supreme Court ruled that LIC should settle the claim of insured person in this case.      
• In the present case, Mahipal was a chronic alcoholic. This is established by the following facts:

1. Mahipal was admitted to Sir Ganga Ram Hospital with ‘severe abdominal pain and vomiting’, which are typical symptoms of alcohol consumption and of chronic liver disease.
2. Prescription slips of Siwach Hospital, which Mahipal had visited one day prior to hospitalisation in Sir Ganga Ram Hospital, clearly indicates ‘history of chronic alcohol intake’.  

• Mahipal was in hospital for one month and was treated for, besides diabetes, chronic liver disease which is a direct consequence of long-term alcohol consumption. The cause of his death, cardiac arrest, also has a direct relation to his pre-existing condition of chronic liver disease, from medical point of view. 
• While applying for the health insurance policy, Mahipal had answered ‘No’ to the question: “Does the Life Insured consume Alcohol/Cigarettes/Bidis or tobacco in any form?”. This amounts to a deliberate concealment of pre-existing health conditions.
• LIC’s “Jeevan Arogya” is a ‘hospital cash benefit’ policy and not a ‘medical reimbursement’ policy. It is a ‘non-medical, general insurance’ policy that does not mandate a pre-policy medical examination of the person insured and is issued based solely on the declarations made by him/her. 
• The Supreme Court found that NCDRC had erred in concluding that Mahipal’s death, due to cardiac arrest, was not related to the pre-existing condition of chronic liver disease and in basing their decision on this conclusion.  

On the basis of the above analysis, Supreme Court accepted the appeal of LIC and set aside the rulings of the Forum, SCDRC and NCDRC. On humanitarian grounds, however, Supreme Court exempted Respondents from having to returning the money already paid to them by Appellant under the policy. 

For full text of the judgment:

https://www.sci.gov.in/sci-get-pdf/?diary_no=272952020&type=o&order_date=2025-03-03&from=latest_judgements_order