NCDRC Allows Rs 10 Crore Personal Accident Claim Against United India Insurance, Dismisses Claim Against National Insurance on Material Concealment
After a Supreme Court remand and nearly three decades of litigation, NCDRC splits its verdict on two personal accident policies covering the 1997 road-accident death of Kishori Lal Sharan Garg.
The National Consumer Disputes Redressal Commission has delivered a split verdict in two long-running personal accident insurance complaints arising from the death of Late Kishori Lal Sharan Garg, who died on 27 March 1997 when his car collided with a truck on the Jaipur–Delhi road. The Commission, presided over by Justice A.P. Sahi with Member Bharatkumar Pandya, allowed the complaint against United India Insurance Co. Ltd. for Rs 10 crore but dismissed the complaint against National Insurance Co. Ltd. for Rs 5 crore. The central question in both cases was whether the insured had suppressed material facts in his proposal forms. The Commission found that United India Insurance failed to produce the original, dated proposal form on which its repudiation rested, while the insured had concealed a pending proposal before United India Insurance when he filled up the National Insurance proposal form on 21 January 1997.
The Two Policies and the Repudiations
Kishori Lal Sharan Garg held two personal accident policies at the time of his death. The first, with United India Insurance Co. Ltd., covered a sum of Rs 10 crore for the period 11 February 1997 to 10 February 1998, comprising two proposals of Rs 9,97,000 and Rs 3 lakhs. The second, with National Insurance Co. Ltd., was for Rs 5 crore covering 31 January 1997 to 30 January 1998.
After the accident, both insurers appointed surveyors and investigators. United India Insurance engaged M/s R.L. Aggarwal & Sons, who submitted four reports between April 1997 and February 1998, and also commissioned an investigation by a retired Deputy Superintendent of Police, G.L. Yadav, whose final report was tendered on 25 April 1999. National Insurance engaged M/s Lal International Security and Detective Services, which submitted an interim report on 20 July 1997 and a final report on 12 October 1998.
The two insurers corresponded with each other and held a joint meeting at the head office of National Insurance. United India Insurance sought a legal opinion from Justice R.S. Pathak, former Chief Justice of India. That opinion, as recorded in the Commission's order, held that the claim could not be repudiated on the basis of the insured's reputation or criminal cases against him, but that repudiation could be justified on the basis of negative entries in the proposal form.
United India Insurance repudiated the claim on 16 June 2000, citing misstatements in clauses 10(a) and 10(b) of the proposal form — specifically, the alleged failure to disclose an existing LIC policy and a pending proposal for Rs 5 crore with National Insurance. National Insurance repudiated on 29 September 2000 on two grounds: non-disclosure of the proposals and policies with United India Insurance, and the insured's disproportionate income combined with the complainant's refusal to cooperate in income verification.
Earlier NCDRC Order and Supreme Court Remand
The two complaints were first decided by this Commission on 24 November 2005. OP No. 164 of 2001 against United India Insurance was allowed, directing payment of Rs 10 crore with interest at 9% per annum from 1 July 1997. OP No. 272 of 2001 against National Insurance was dismissed.
Both sides appealed to the Supreme Court. United India Insurance filed Civil Appeal No. 2599 of 2006 and the complainant filed Civil Appeal No. 1720 of 2006. The Supreme Court, on 11 January 2017, set aside the Commission's 2005 order and remanded both complaints for fresh consideration. The Apex Court directed the Commission to summon the complete records of both insurers — including correspondence from divisional, regional and head offices, and despatch registers — and to record oral evidence with cross-examination. The Court observed that the assured amount of Rs 10 crore was extremely high compared to the insured's earlier LIC policy of Rs 2 lakhs, and that the status of a 1996 proposal said to have been declined by United India Insurance required proper examination.
An attempt at arbitration before Justice Arun Kumar (Retd.) could not be completed as the arbitrator passed away in July 2013. The Supreme Court then decided to have the matter adjudicated by the Commission itself.
Evidence Recorded After Remand
Following the remand, the Commission passed a series of directions between May and August 2017 requiring both insurers to produce original proposal forms, despatch registers, and intra-office communications. United India Insurance's Managing Director was directed to file an affidavit explaining why records could not be traced. The affidavit was ultimately filed by the company's General Manager and Director, Ms P. Hemamalini, on 8 September 2017.
A former Additional District Judge, Mr S.M. Chopra, was appointed as Court Commissioner to record the cross-examination of complainant Smt. Asha Garg. Evidence affidavits and cross-examination of United India Insurance's witnesses — including Development Officer Rajiv Simlote and Regional Manager Rajiv Kumar Saxena — were also recorded. The cross-examination of Simlote ran to 218 questions.
The matter was further delayed by the Covid-19 pandemic and subsequent adjournments. Final arguments were heard across multiple dates in 2025, with Senior Advocate Joy Basu appearing for the complainants, Amit Kumar Singh for United India Insurance, and Yogesh Malhotra for National Insurance.
The Dispute Over the Proposal Forms: United India Insurance
The core of the United India Insurance case was that the insured had suppressed, in his proposal form, the existence of an earlier proposal dated 19 March 1996 and an existing LIC policy. The complainants' case was that the proposal forms produced by United India Insurance were photostat copies, undated, and inconsistent with the policy itself.
The policy issued by United India Insurance stated in its schedule that it was based on a written proposal and declaration dated 11 February 1997. The complainants argued that no proposal form bearing that date had ever been produced. The photostat copies relied on by the insurer bore no date, no acceptance seal, and no stamp of a higher authority — features that the insurer's own witnesses, including Simlote and Saxena, admitted were standard requirements for all proposal forms.
The complainants also pointed to discrepancies in the names of nominees. The policy listed four nominees — the widow, son, daughter, and a nephew — while the proposal forms produced by the insurer mentioned only two. Simlote's affidavit attributed the addition of two nominees to an oral request, but his cross-examination answer to question 216 stated that all assignments and nominations required written instructions from the insured, directly contradicting the affidavit.
On the premium figures, Simlote's cross-examination answer to question 190 stated that only one proposal of Rs 10 crore had been received from the insured, which the complainants argued contradicted the insurer's reliance on multiple proposal forms. The insurer's counsel, Amit Kumar Singh, responded that the premium discrepancy was explained by an additional demand of Rs 31,463 raised vide letters dated 4 March 1997 and 7 March 1997, bringing the total premium to approximately Rs 99,451 — consistent with the Rs 99,750 mentioned in the undated proposal form.
The Commission found that United India Insurance had failed to produce the original proposal form dated 11 February 1997 as referenced in the policy, despite the Supreme Court's specific direction to do so. The affidavits of Hemamalini and Simlote confirmed that no such original was available. The Commission held that the proposal forms relied on by United India Insurance — being undated photostat copies with inconsistencies in nominee names and premium figures — could not be treated as the genuine proposal forms connected to the policy. Without proof of the proposal form, the allegation of misstatement in clauses 10(a) and 10(b) was not established. The repudiation letter dated 16 June 2000 was accordingly held to be unsustainable, and OP No. 164 of 2001 was allowed.
The Dispute Over the Proposal Form: National Insurance
The position in OP No. 272 of 2001 was materially different. National Insurance produced its original records, including the proposal form dated 21 January 1997 signed by the insured, two letters from the insured requesting coverage, and internal communications between its branch, divisional, regional and head offices.
The proposal form for the National Insurance policy asked at question 7(a) whether the proposer had ever proposed for accident or life insurance. The insured left the answer blank. At question 7(b), he disclosed only an LIC policy for Rs 2 lakhs. He answered question 7(c) — whether any company had declined to issue a policy — in the negative.
The complainants' argument was that on 21 January 1997, the date of the National Insurance proposal, no policy had yet been issued by United India Insurance (the United India policy was dated 11 February 1997). The proposal before United India Insurance had not been formally accepted or rejected, and no communication of rejection had been sent to the insured. Therefore, the insured had nothing to disclose.
The Commission rejected this argument. It found that the proposal before United India Insurance had been initiated at the insured's instance in September/October 1996, forwarded through the divisional and regional offices, and was actively being processed when the insured filled up the National Insurance proposal form on 21 January 1997. The Commission held that no policy can be issued without a proposal form, and the insured could not have been unaware of the proposal he himself had set in motion for Rs 10 crore coverage. The cross-examination of Smt. Asha Garg, in which she denied knowledge of the proposals being taken or the United India policy being mooted, did not inspire confidence in the Commission's assessment.
The Commission also noted that the documents produced by United India Insurance — including the letter dated 8 October 1996 forwarding the proposal for Rs 10 crore, and subsequent internal correspondence — constituted evidence in OP No. 164 of 2001 that was equally relevant to OP No. 272 of 2001. That evidence established that the proposal before United India Insurance was well within the insured's knowledge when he filled up the National Insurance form.
The Commission held that leaving question 7(a) blank and disclosing only the LIC policy while omitting any reference to the pending Rs 10 crore proposal before United India Insurance amounted to material concealment. The repudiation by National Insurance on this ground was upheld. The Commission did not find it necessary to examine the second ground of repudiation relating to income verification.
Order
OP No. 164 of 2001 against United India Insurance Co. Ltd. is allowed. OP No. 272 of 2001 against National Insurance Co. Ltd. is dismissed. The Commission did not set out the precise quantum of relief or interest directions in the final operative paragraphs extracted in the digest beyond allowing OP No. 164 of 2001; the earlier 2005 order had directed Rs 10 crore with interest at 9% per annum from 1 July 1997, and the amount had been withdrawn by the complainant on furnishing security pursuant to Supreme Court directions in 2006, with any refund obligation left subject to the final order.