In Brief
A life insurance company sought to repudiate a death claim on the ground that the proposer had failed to disclose a serious pre-existing medical condition (vomiting of blood and hospitalization) that occurred one month before policy issuance. The National Consumer Disputes Redressal Commission had upheld payment of the full claim. The Supreme Court held that the principle of utmost good faith in insurance contracts requires full disclosure of all material facts, especially where specific health-related questions are asked in the proposal form. The Court set aside the NCDRC judgment as laying down incorrect law. However, applying Article 142 of the Constitution, the Court permitted the respondent (a 70-year-old widow) to retain the full amount already paid, without recovery."
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