Once Premium Is Accepted and Policy Issued, LIC Cannot Repudiate Based on Agent’s Omission or Blank Column: Allahabad High Court Orders LIC to Pay ₹15 Lakh Death Benefit

Mere Omission in Proposal Form Cannot Defeat Legitimate Insurance Claim:- In a decisive judgment safeguarding the rights of insured families, the Allahabad High Court on April 29, 2025, directed Life Insurance Corporation of India (LIC) to disburse ₹15 lakhs to Santosh Kumar, the nominee husband of a deceased policyholder. Division Bench of Justice Shekhar B. Saraf and Justice Vipin Chandra Dixit held that LIC cannot reject a life claim on the sole ground that a column regarding previous policies was left blank, especially when all policies were issued by LIC itself.

Santosh Kumar's wife, Meera Devi, had taken a life insurance policy from LIC on August 16, 2018, for ₹15 lakhs. Tragically, she passed away from a heart attack less than a year later, on July 8, 2019. Kumar, her nominee, submitted a death claim which was repudiated by LIC on March 23, 2021. LIC cited “concealment” of a previous policy issued just three months earlier (Policy No. 205601558), allegedly not disclosed in “Column 9” of the proposal form.

The Insurance Ombudsman subsequently rejected Kumar’s complaint on May 19, 2023, citing procedural grounds like jurisdictional bar and delay, without addressing the claim on merits. Aggrieved, Kumar approached the High Court.

The High Court noted that LIC had already honoured three other policies issued to Meera Devi, and the disputed one too was issued by LIC itself—indicating all prior policy data was well within LIC’s knowledge. The omission to fill “Column 9” was attributed to LIC’s own agent, who allegedly advised the insured that no further details were needed.

The Court made an important legal distinction: “This is not suppression of a ‘material fact’… LIC cannot shrug away responsibility by merely taking the ground that the previous policy was not disclosed.”

Further, the Court held that if LIC accepted the premium and issued the policy bond despite a blank column, it had no right to later repudiate the policy: “If the insurer does not ask the insured to clarify a blank column and accepts the premium, it waives its right to later repudiate on that ground.”

Referring to Section 45 of the Insurance Act, 1938, the Bench clarified that while a policy may be questioned within three years on grounds of fraud or material misstatement, such repudiation cannot succeed unless the insurer proves deliberate suppression.

Citing Mahaveer Sharma v. Exide Life Insurance Co. Ltd. (2025 SCC OnLine SC 435), Manmohan Nanda (2022) 4 SCC 582, and Mahakali Sujatha (2024) 8 SCC 712, the Court reiterated: “The burden lies on the insurer to prove that misstatement was made fraudulently. In the present case, no such evidence was led.”

It further relied on the contra proferentem doctrine: “Standard form insurance contracts must be construed against the drafter. If a column is left blank, the onus is on the insurer to seek clarification.”

The Court found that the rejection by the Insurance Ombudsman was equally flawed: “Despite valid representation and compliance, the Insurance Ombudsman arbitrarily rejected the complaint quoting procedural rules without applying mind to the facts.”

Allowing the writ petition, the Allahabad High Court quashed both the LIC rejection order dated March 23, 2021 and the Insurance Ombudsman’s order dated May 19, 2023. It directed LIC: “To pay the full insured sum of ₹15 lakhs to the petitioner within six weeks.”

The Court refrained from imposing costs, noting that the matter raised a question of law but emphatically declared: “A valid claim cannot be denied for a blank form column—especially when the insurer holds the information and fails its own duty of due diligence.”

Date of Decision: April 29, 2025