The Madras High Court has reaffirmed that suppression or non-disclosure of facts by the insured is “material” only if it affects the risk covered by the insurance contract or relates directly to the cause of death. The judgment upholds existing Supreme Court precedents, clarifying that repudiation of claims is not justified where undisclosed facts have no nexus with the insured’s cause of death. This decision is binding on lower courts within Tamil Nadu and will serve as persuasive authority elsewhere in matters involving repudiation of insurance claims, especially in the life insurance sector.
Summary
| Category | Data |
|---|---|
| Case Name | AS(MD)/13/2016 of THE LIFE INSURANCE CORPORATION Vs MAHESWARI |
| CNR | HCMD010840342016 |
| Date of Registration | 25-01-2016 |
| Decision Date | 29-10-2025 |
| Disposal Nature | DISMISSED |
| Judgment Author | HONOURABLE MR JUSTICE C.V. KARTHIKEYAN, HONOURABLE MR JUSTICE R.VIJAYAKUMAR |
| Court | Madras High Court |
| Bench | Division Bench: HONOURABLE MR JUSTICE C.V. KARTHIKEYAN, HONOURABLE MR JUSTICE R.VIJAYAKUMAR |
| Precedent Value | Binding on subordinate courts within Tamil Nadu; persuasive elsewhere |
| Overrules / Affirms |
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| Type of Law | Contract Law (Insurance), Civil Procedure |
| Questions of Law |
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| Ratio Decidendi |
The Court reaffirmed that only those non-disclosures or suppressions that are relevant to the risk assumed by the insurer or connected to the cause of death are “material.” If previous illnesses, medical treatments, or past accidents are not causally connected to the insured’s death, repudiation of the policy is unjustified. The insurer’s right to repudiate must be exercised in consonance with the purpose and nature of the policy; material facts are those going to the root of the contract or bearing on risk. The burden to prove materiality and causal connection lies squarely on the insurer. Selective repudiation by the insurer is impermissible if other similar claims from the same set of facts under similar policies are honored. |
| Judgments Relied Upon |
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| Logic / Jurisprudence / Authorities Relied Upon by the Court |
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| Facts as Summarised by the Court |
The insured (plaintiff’s husband) had five life insurance policies. Claims under some policies were honored by LIC; others were repudiated for alleged non-disclosure of prior accident and illness. Insured died in a motor accident unrelated to previously undisclosed incidents. The trial court decreed the suit for the beneficiary. Insurer appealed. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts in Tamil Nadu; District & Civil Courts deciding insurance disputes |
| Persuasive For | Other High Courts and the Supreme Court in India, especially in insurance claim repudiation matters |
| Follows |
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What’s New / What Lawyers Should Note
- The Court clarifies that non-disclosure or suppression by insured must be “material” in the context of the risk/contract; if undisclosed facts have no connection with the cause of death (e.g., accidental death unrelated to prior ailments), repudiation is unjustified.
- Selective repudiation is not permissible—insurers cannot honor claims under some policies but repudiate others on identical fact patterns.
- Burden is squarely on insurers to establish that the non-disclosure was material to risk and causally connected to the cause of death.
- Reiterates and applies the contra proferentem rule—ambiguities in standard insurance contracts are construed against insurers.
- Reinforces the principle that failure to disclose unrelated prior policies or ailments cannot, without more, justify rejection of a claim in case of accidental death.
- Lawyers handling insurance disputes can confidently cite this decision to counter insurer repudiations based on immaterial non-disclosures.
Summary of Legal Reasoning
- The Court exhaustively analyzed relevant Supreme Court precedents—Reliance Life v. Rekhaben Rathod, Mahakali Sujatha v. Future Generali, Mahaveer Sharma v. Exide Life, Om Prakash Ahuja v. Reliance General, and Sulbha Prakash Motegaonkar v. LIC—holding that non-disclosure must affect the risk or have a connection with the cause of death to be “material.”
- The “materiality” test is whether a prudent insurer’s decision to issue the policy would have changed had the fact been disclosed, and whether it bears on the risk covered.
- Where the cause of death is accidental and wholly unrelated to a prior ailment or accident, withholding such information is not a material suppression of fact and cannot justify repudiation.
- The insurer’s honor of similar policies under comparable circumstances weakens its ability to selectively repudiate others on identical factual grounds.
- The contra proferentem rule was invoked—ambiguities in the policy wording are interpreted against the insurer.
- The insurer carries the burden of proving both materiality and causal connection between nondisclosure and cause of death, which was not discharged in this case.
- Consequently, the Court upheld the trial court’s decree for the beneficiary.
Arguments by the Parties
Petitioner (Appellant – Life Insurance Corporation):
- Insured failed to disclose previous accident (2001) and stomach ailment/treatment (2006) in proposal forms, thus suppressing material facts.
- Non-disclosure of existing policies also amounted to suppression of material information.
- Based on such suppression, insurer was entitled to repudiate claims under the disputed policies.
- Relied on Supreme Court judgments emphasizing duty of full disclosure and “materiality” of prior insurance/medical facts.
- Contended that answering negative to specific queries in the proposal form amounted to misrepresentation.
- Claimed selective honoring of policies was justified based on material suppression.
Respondent (Plaintiff/Beneficiary):
- Cause of death of insured (accident while travelling as passenger) was wholly unrelated to the prior accident or ailments.
- Insured was not the driver and had no role in the accident resulting in death.
- Insurer processed and honored lower-value policies despite identical “non-disclosures”—inconsistent stand.
- All details of earlier policies were, in fact, disclosed.
- Relied on several Supreme Court precedents holding suppression immaterial where not connected to cause of death.
- Argued insurer cannot selectively refuse payment for some policies and honor others on the same facts.
Factual Background
The plaintiff’s husband, a businessman, took five life insurance policies from LIC. After his accidental death in 2009 while riding as a passenger in a car, claims were lodged under all policies. LIC honored claims under some but repudiated others, citing non-disclosure of a previous accident in 2001 and a stomach ailment in 2006. The trial court held that these undisclosed facts were unrelated to the cause of death (accident) and decreed in favor of the plaintiff. LIC appealed against the trial court’s judgment.
Statutory Analysis
- Section 45 of the Insurance Act, 1938: The Court examined the provision concerning contesting policies on the ground of misstatement or suppression, clarifying that the burden is on the insurer to show materiality.
- Insurance Regulatory and Development Authority (Protection of Policyholders’ Interests) Regulations, 2002: Proposal forms and “materiality” of disclosures were explained. The definition of “material” facts and requirements for insurer to prove suppression were discussed.
- No constitutional provisions were invoked, and the interpretation was in line with the plain meaning and prevailing judicial understanding.
Dissenting / Concurring Opinion Summary
No dissenting or separate concurring opinion is recorded in the judgment. The decision is unanimous.
Procedural Innovations
No new procedural innovations, guidelines, or directions have been set by this judgment.
Alert Indicators
- ✔ Precedent Followed – Affirms and applies Supreme Court precedents on insurance contract interpretation and “materiality” of non-disclosure in repudiation cases.