A) ABSTRACT / HEADNOTE

Mahaveer Sharma v. Exide Life Insurance Company Limited & Anr., Civil Appeal No. 3562 of 2025 (decided 25 February 2025) addresses whether non-disclosure of other life insurance policies by the proposer amounted to material suppression justifying repudiation of a death claim. The insured (father of the appellant) procured a ₹25,00,000 term policy on 9 June 2014 and died in an accident on 19 August 2015.

The insurer repudiated the claim on the ground that the proposer failed to disclose three existing policies issued by Life Insurance Corporation of India while disclosing only one policy from Aviva, which the proposal form mistakenly recorded as ₹4,00,000 though the Aviva policy in truth assured ₹40,00,000. The State and National Consumer Commissions found suppression and dismissed the claim.

The Supreme Court examined the doctrine of uberrima fides, definitions of material under the Insurance Regulatory and Development Authority (Protection of Policyholders’ Interests) Regulations, 2002, and precedents including Rekhaben Rathod, Manmohan Nanda, Mahakali Sujatha, and Satwant Kaur Sandhu. The Court held that the proposer had made a substantial disclosure by declaring the Aviva policy (and indeed providing its copy) and that the undisclosed LIC policies aggregated to only ₹2,30,000 an inconsequential amount relative to the disclosed ₹40,00,000 and the subject policy of ₹25,00,000.

Applying the prudent insurer test and authorities on materiality, the Court concluded the omissions would not have influenced a prudent insurer’s decision to grant the cover; repudiation was therefore improper. The orders of repudiation and the consumer fora were set aside and the insurer directed to pay policy benefits with nine percent interest.

Keywords: Life insurance policy; material suppression; uberrima fides; substantial disclosure; prudent insurer; proposal form; sum assured; repudiation of claim.

B) CASE DETAILS

i) Judgment Cause Title
Mahaveer Sharma v. Exide Life Insurance Company Limited & Anr.

ii) Case Number
Civil Appeal No. 3562 of 2025.

iii) Judgment Date
25 February 2025.

iv) Court
Supreme Court of India.

v) Quorum
B.V. Nagarathna and Satish Chandra Sharma, JJ.

vi) Author
Hon’ble Satish Chandra Sharma, J.

vii) Citation
Mahaveer Sharma v. Exide Life Insurance Co. Ltd. & Anr., [2025] 2 S.C.R. 1311 : 2025 INSC 268.

viii) Legal Provisions Involved
Insurance Regulatory and Development Authority (Protection of Policyholders’ Interests) Regulations, 2002 definition of proposal form and material.

ix) Judgments overruled by the Case (if any)
None expressly overruled; prior decisions applied/distinguished (notably Rekhaben Rathod and Mahakali Sujatha).

x) Related Law Subjects
Insurance Law; Consumer Law; Contract Law (principle of uberrima fides).

C) INTRODUCTION AND BACKGROUND OF JUDGMENT

The appeal arises from consumer forums upholding repudiation of a life insurance claim on the ground of alleged suppression of material facts in the proposal form. The insured obtained the subject policy on 9 June 2014 and died in an accident on 19 August 2015. The insurer repudiated a claim on 3 March 2016 contending the proposer disclosed only one existing policy (Aviva) but omitted three LIC policies that were in force.

The consumer fora accepted repudiation, relying on authorities that treat failure to disclose existing covers as material. On appeal, the Supreme Court was called to determine whether the omissions amounted to material suppression that would have influenced a prudent insurer in underwriting the risk. The Court framed the inquiry against statutory guidance from the IRDA (Protection of Policyholders’ Interests) Regulations, 2002 which require full disclosure of material facts, and against the jurisprudential standard that materiality is evaluated by whether the fact would affect a prudent insurer’s judgment as to acceptance or premium.

The case thus raised the tension between strict enforcement of disclosure obligations under uberrima fides and a contextual, fact-sensitive assessment of materiality where a substantial disclosure (here, a high-value private policy) was made and documentary proof of that disclosure was produced to the insurer during proposal.

D) FACTS OF THE CASE

Ramkaran Sharma procured a term insurance policy from Exide Life on 9 June 2014 for ₹25,00,000. He died in an accident on 19 August 2015. The proposal form included statutory clauses (51–55) asking about existing and pending life/health covers. Under clause 54, the proposer entered details of an Aviva policy and the proposal form incorrectly recorded the Aviva sum assured as ₹4,00,000, while the actual Aviva policy furnished to the insurer showed ₹40,00,000.

The insurer later produced additional documents (Exhibits A-4 to A-6) showing three LIC policies in force whose aggregated sum assured amounted to ₹2,30,000. The insurer repudiated the claim on the basis that the proposer had concealed these LIC policies at the time of proposal. The State Consumer Commission and the National Commission upheld repudiation, relying on precedents treating non-disclosure of other life covers as material. The appellant (son) contested repudiation, arguing inadvertent omission, agent-filled form, and the fact that death resulted from accident (not health risk), and that the Aviva policy had been disclosed and its copy produced.

E) LEGAL ISSUES RAISED

i. Whether omission of three small-value existing life policies (aggregating ₹2,30,000) when one substantial policy (₹40,00,000) was disclosed amounts to material suppression justifying repudiation?

ii. Whether the prudent insurer test and statutory definition of material under the IRDA Regulations, 2002 were satisfied so as to void the policy?

iii. Whether the insurer discharged the burden of proving that non-disclosure was fraudulent or would have affected underwriting?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsels for Petitioner / Appellant submitted that the proposer had in fact disclosed an existing life cover from Aviva under clause 54 and furnished a copy of that policy; any omission to mention three LIC policies was inadvertent and occurred in a form filled by an agent; the disclosed Aviva policy (actually ₹40,00,000) was substantially larger than the undisclosed LIC aggregate (₹2,30,000), demonstrating capacity to bear premiums; the death arose from an accident and not from a health condition, so non-disclosure of other life policies could not be material to the risk; and prior precedents dealing with nondisclosure of health or nondisclosure of proximate duplicate covers were distinguishable on facts.

G) RESPONDENT’S ARGUMENTS

The counsels for Respondent submitted that the proposer held four policies at the time of proposal and deliberately failed to disclose the three LIC policies; failure to disclose other life covers falls within the class of material facts that must be disclosed under uberrima fides; judicial authorities (including Rekhaben Rathod) authorize repudiation where there is complete non-disclosure of prior insurance; and the insurer relied upon records and Exhibits A-4 to A-6 to show existence of the LIC policies.

H) JUDGMENT

The Court analyzed statutory definitions and precedent. It reiterated that insurance contracts rest on uberrima fides and that a proposer must disclose material facts facts that would influence a prudent insurer in accepting risk or fixing premium, as elucidated by the IRDA (Protection of Policyholders’ Interests) Regulations, 2002 and judicial pronouncements.

The Court observed the critical factual matrix:

(i) an Aviva policy was disclosed and its true sum assured (₹40,00,000) was provided to the insurer though the proposal form mistakenly recorded it as ₹4,00,000;

(ii) the undisclosed LIC policies together amounted to ₹2,30,000; and

(iii) the subject policy was ₹25,00,000 and death was accidental.

The Court distinguished Rekhaben Rathod where there was complete failure to disclose another recent large policy obtained shortly before the contract, and repudiation was within two years; here the disclosure was substantial and documentary. Applying the prudent insurer test, the Court held the undeclared LIC policies were inconsequential to the insurer’s underwriting calculus and would not have influenced acceptance or premium.

The insurer had been aware of a high-value Aviva policy and accepted the risk notwithstanding that knowledge, showing it had not considered the existence of other small policies to be material. The Court found the burden on an insurer to prove material suppression was not satisfied. Consequently, repudiation was improper; relief was granted directing payment of policy benefits with interest at 9% per annum from due date to realization.

a. RATIO DECIDENDI

The operative ratio is that materiality must be decided contextually by the prudent insurer test; where a proposer makes a substantial disclosure particularly of a significantly larger existing life cover, documented and known to the insurer omission of other minor policies whose aggregate sum assured is negligible relative to disclosed and proposed sums does not constitute material suppression justifying repudiation.

The Court held the insurer failed to prove that the omitted LIC policies would have influenced underwriting or that nondisclosure was fraudulent. This encapsulates the legal rule that not every omission is material; the decisive inquiry is whether the fact would affect a prudent insurer’s decision on acceptance or premium.

b. OBITER DICTA

The Court observed, by way of guidance, that answers in proposal forms must be read fairly and reasonably; trifling or inconsequential inaccuracies should be ignored. It reiterated established canons from earlier cases that blank answers may be construed as negative only when reasonable; insurers accepting a proposal despite blanks may be taken to have waived further inquiries.

The judgment emphasized that Mediclaim contexts (health nondisclosures) differ in materiality from life policies where death by accident not illness is the risk realized. The Court also highlighted the reciprocal duty of insurers to inform proposers of terms and to seek clarification when necessary.

c. GUIDELINES 

1. Materiality is case-sensitive and tested by whether a prudent insurer would be affected in accepting risk or fixing premium.

2. Disclosure of an existing high-value policy, supported by documentary proof, qualifies as substantial disclosure and may neutralize non-disclosure of minor policies.

3. Insurers bear the burden to prove that non-disclosure was material and fraudulent where repudiation is pleaded on suppression.

4. Distinctions must be drawn between Mediclaim (health-sensitive) and life/accident covers when assessing materiality of health-related nondisclosures.

5. If an insurer accepts a proposal after seeing incomplete answers or produced documents, it may be presumed to have waived further enquiries on those points.

I) CONCLUSION & COMMENTS

The Supreme Court allowed the appeal and set aside orders of repudiation and of the consumer commissions. The insurer was directed to pay the policy benefits to the appellant with interest at 9% per annum. The decision reinforces a contextual, pragmatic approach to materiality in insurance law: the duty of disclosure under uberrima fides remains fundamental, but not every omission will void a policy. Courts must assess whether the specific non-disclosed fact would have affected a prudent insurer’s decision.

The judgment is salutary for policyholders because it curtails literalistic repudiations where substantial disclosure (and documentary proof) has been provided and the omitted matters are inconsequential in quantum. Insurers are reminded of their reciprocal duties to seek clarification and to construe proposal answers reasonably. The ruling carefully distinguishes precedents like Rekhaben Rathod where complete, proximate non-disclosure of a similar high-value policy justified repudiation; factual dissimilarity matters. Practitioners should note this decision when advising on claim disputes: assemble documentary evidence of disclosures, quantify comparative sums assured, and frame materiality submissions around the prudent insurer standard.

J) REFERENCES

a. Important Cases Referred

i. Mahaveer Sharma v. Exide Life Insurance Co. Ltd. & Anr., Civil Appeal No. 3562 of 2025, [2025] 2 S.C.R. 1311 : 2025 INSC 268.
ii. Reliance Life Insurance Co. Ltd. & Anr. v. Rekhaben Nareshbhai Rathod, (2019) 6 SCC 175; [2019] 6 S.C.R. 733.
iii. Manmohan Nanda v. United India Assurance Co. Ltd. & Anr., (2022) 4 SCC 582; [2021] 11 S.C.R. 1138.
iv. Mahakali Sujatha v. Branch Manager, Future Generali India Life Insurance Co. Ltd. & Anr., (2024) 8 SCC 712; [2024] 4 S.C.R. 724.
v. Satwant Kaur Sandhu v. New India Assurance Co. Ltd., (2009) 8 SCC 316; [2009] 10 S.C.R. 560.

b. Important Statutes / Regulations Referred

i. Insurance Regulatory and Development Authority (Protection of Policyholders’ Interests) Regulations, 2002 — definition of proposal form and material.