Anil Kumar, a textile dealer, had purchased four Life India Insurance Corporation insurance (LIC). The first two insurance, both for Rs 5 lakh, were purchased in 2003. In 2005, he purchased the third and fourth insurance, each for Rs 12 lakh and Rs 4 lakh.
The four plans provided a total of Rs 26 lakh in coverage. In all of the policies, his father, Vijay Pal Singh, was the nominee.
On July 31, 2006, Anil was killed in a car accident. Despite warnings and follow-up, his father Vijay filed claims under the four policies, but none of them was satisfied. As a result, Vijay went to the Uttar Pradesh Consumer Commission and filed a complaint.
The case was challenged by LIC, which claimed that due to the large value of the claims, a comprehensive investigation was required. It agreed to pay Rs 5 lakh in claims under the first two plans. However, two claims for policies purchased in 2005 were denied because insurance coverage from HDFC Standard Life Insurance and TATA AIG Life Insurance was not declared when the proposal form was submitted to LIC. The allegation was partially upheld by the state commission. The order was challenged by both Vijay and LIC.
The national commission cited a Supreme Court judgement that insurance fraud will be assessed only on the basis of the definition in the Insurance Regulatory and Development Authority (IRDA) Act, with the Contract Act explanation being irrelevant.