Delhi

North

CC/337/2024

RAHUL JAIN - Complainant(s)

Versus

AADHAR HOUSING FINANCE LTD - Opp.Party(s)

27 Aug 2024

ORDER

District Consumer Disputes Redressal Commission-I (North District)

[Govt. of NCT of Delhi]

Ground Floor, Court Annexe -2 Building, Tis Hazari Court Complex, Delhi- 110054

 

Consumer Complaint No.337/2024

Date of filing: 06.08.2024

Date of disposal: 27.08.2024

In the matter of

Rahul Jain

S/o Late Sh. Mahipal Jain                       …       Complainant No. 1

Smt. Neelam Jain

Wd./o Late Sh. Mahipal Jain                  …       Complainant No. 2

Both R/o

2875, Gali Dharamsala Wali,

Subzi Mundi, Delhi-110007

VERSUS

M/s Aadhar Housing Finance Ltd.

Through its MD/Director/ Principal Officer

Shop No.15, 16 & 17 First floor,

Krishna Complex, Sector-31

Nithari Village, Noida,

Uttar Pradesh-201301                          …       Opposite Party No. 1

 

M/s Pramerica Life Insurance Ltd.

4th floor, Building No.9, Tower-B

Cyber City, DLF City Phase-III,

Gurgaon-122002, Haryana                    …       Opposite Party No. 2

 

ORDER

27/08/2024

Present: Complainant No. 1 in person

 (Divya Jyoti Jaipuriar)

1. We have heard the arguments of Shri Ratnesh Bansal, Ld. Advocate for the Complainants on merits of the complaint. We have also perused the records placed by the Complainants in this complaint. Ld. Advocate for the Complainants has also placed on record an affidavit indicating that the Complainants herein are residing within territorial jurisdiction of this Commission. The said affidavit is taken on record. Complainant No. 1 is the son of Shri Mahipal Singh [the Deceased Life Insured (DLA)] and Complainant No. 2 is the widow of DLA.
2. The main grievance of the Complainants is that the insurance claim after the death of DLA has been repudiated. The DLA has obtained a home loan of Rs. 24,97,699/- from M/s Aadhaar Housing Finance Limited (OP-1 herein) through its agent namely Shri Shiv Narayan (not a party). The said loan was sanctioned on 28.02.2022 and was subsequently disbursed to the DLA. The DLA also purchased a group insurance policy for securing the said loan, bearing policy number GC000038XXXX100, from M/s Pramerica Life Insurance Limited (OP-2 herein). It is stated that purchase of the said policy was a precondition for approval of the loan.
3. On 20.11.2023, the DLA expired after he was diagnosed with cancer. Thereafter, the Complainants herein lodged the insurance claim with OP-2. The said insurance claim was subsequently repudiated vide letter dated 30.03.2024 on the ground that the DLA had not disclosed in the proposal form about the treatment of Coronary Artery Disease (CAD) for which he has undergone the Percutaneous Transluminal Coronary Angioplasty (PTCA); and about the treatment of Renal Calculus for which he has undergone Cystoscopy Laser Disintegration of stone prior to inception of the policy. By the said repudiation letter, the OP-2 has also cancelled the policy and refunded the premium to the OP-1, which paid the premium on behalf of the DLA at the time of purchase of the policy. The said repudiation letter dated 30.03.2024 is subject matter of this complaint.
4. At the very onset, it is important to mention here that the Complainants have fairly disclosed in paragraph 14 of the complaint, that at the time of lodging insurance claim, they have submitted the discharge summary dated 27.09.2017 issued by M/s Sehgal Neo Hospital (not a party), where the DLA was admitted for Cystoscopy Laser Disintegration of Stone. It is also stated that the PTCA was conducted on DLA in the year 2006 and the said information was also shared to the OPs by the Complainants herein at the time of lodging claim.
5. It is indeed a fact that in the policy proposal form, the DLA has not disclosed about these ailments and procedures. It was argued by Ld. Advocate for the Complainants that the DLA signed the blank form and the said form was later filled up by the Agents of OPs. Ld. Advocate for Complainants also argues that the OPs failed to explain to the DLA about the insurance policy and the details as filled up in the proposal form at the time when the insurance policy was purchased. He relies on the IRDAI (Protection of Policyholders’ Interest) Regulations, 2002, by which the IRDAI has mandated that the Insurance Company must explain about the features and details of the policy at the time of purchase of the policy by the policyholders. It is argued by Ld. Advocate for the Complainant that OPs did not explain about the policy at the time of the purchase of policy by DLA and the OPs took signatures of the DLA on blank proposal form.
6. At this stage, it is noted that the Complainants have not filed the complete annexures of the policy with the complaint. We have perused the policy in original, which was shown to us by Ld. Advocate for Complainants during arguments. Along with the policy, the OP-2 has also sent the complete filled up proposal form. At the bottom of each page of the proposal form, the signature of the DLA appears. Once a proposal form is duly signed, the complete responsibility of the information in the said proposal form lies with the insured and not with any other person. If the DLA signs the blank proposal form and the same is subsequently filled up by any other person, the insured is bound to accept all details as given in the proposal form. In this context, the reference is also made to the IRDAI Regulation of 2002, which Ld. Advocate for the Complainants has referred to. Regulation 2 (d) defines “Proposal Form” as “form to be filled in by the proposer for insurance, for furnishing all material information required by the insurer in respect of a risk, in order to enable the insurer to decide whether to accept or decline, to undertake the risk, and in the event of acceptance of the risk, to determine the rates, terms and conditions of a cover to be granted”. This definition also stipulates that the proposal form must be filled up by the insured and not by any other person. Once a duly filled up and signed proposal form is submitted, it is assumed that the said proposal form has been filled up personally by the insured.
7. Further, after the policy was issued, the OPs issued a covering letter with the policy booklet in which it was clearly indicated that the insured must check the documents attached to the welcome letter (which included policy, terms and conditions and copy of the duly filled and signed proposal form). If the Insured finds any incorrect information or if the insured is not in agreement with the policy terms and conditions, the insured must return the policy with his reasons for doing so within the free-look period of 15 days from the date of receipt of policy. Once the policy was not returned by the DLA within the said free-look period, it is assumed that the information so shared in the proposal form were in knowledge of the DLA. Hence, once the details in the proposal form were not challenged by the DLA within the free-look period, it cannot be accepted that the DLA was not aware about the details filled up in the proposal form. Further, non-disclosure about the treatment in for PTCA and CAD, in the years 2006 and 2017 respectively, is also to be considered as deliberate on part of DLA.
8. In the context of non-disclosure in the proposal form, Hon’ble Supreme Court in the matter of Reliance Life Insurance Company Limited vs Rekhaben Nareshbhai Rathod [(2019) 6 SCC 175] has held that non-disclosure of existing individual life insurance policy by the insured is concealment of material fact and the Insurance Company is justified in repudiating the claim on such ground. In this judgment, Hon’ble Supreme Court also rejected the argument on behalf of the insured that the insured must be absolved from all wrongdoing as the insured signed the blank proposal form which was subsequently filled up. In this context, Hon’ble Supreme Court in Rekhaben (supra) judgment, held as under:

“34. We are not impressed with the submission that the proposer was unaware of the contents of the form that he was required to fill up or that in assigning such a response to a third party, he was absolved of the consequence of appending his signatures to the proposal. The proposer duly appended his signature to the proposal form and the grant of the insurance cover was on the basis of the statements contained in the proposal form. Barely two months before the contract of insurance was entered into with the appellant, the insured had obtained another insurance cover for his life in the sum of Rs 11 lakhs. We are of the view that the failure of the insured to disclose the policy of insurance obtained earlier in the proposal form entitled the insurer to repudiate the claim under the policy.”

(underlining by us)

9. In Rekhaben (supra) judgment, Hon’ble Supreme Court has also referred to its earlier judgment in the matter of Satwant Kaur Sandhu vs New India Assurance [(2009) 8 SCC 316] in which it has been held that information sought in the proposal form is material for the purpose of entering into contract of insurance. In Rekhaben (Supra) judgment, Hon’ble Supreme Court further held as under:

“30. It is standard practice for the insurer to set out in the application a series of specific questions regarding the applicant's health history and other matters relevant to insurability. The object of the proposal form is to gather information about a potential client, allowing the insurer to get all information which is material to the insurer to know in order to assess the risk and fix the premium for each potential client. Proposal forms are a significant part of the disclosure procedure and warrant accuracy of statements. Utmost care must be exercised in filling the proposal form. In a proposal form the applicant declares that she/ he warrants truth. The contractual duty so imposed is such that any suppression, untruth or inaccuracy in the statement in the proposal form will be considered as a breach of the duty of good faith and will render the policy voidable by the insurer. The system of adequate disclosure helps buyers and sellers of insurance policies to meet at a common point and narrow down the gap of information asymmetries. This allows the parties to serve their interests better and understand the true extent of the contractual agreement.

31. The finding of a material misrepresentation or concealment in insurance has a significant effect upon both the insured and the insurer in the event of a dispute. The fact it would influence the decision of a prudent insurer in deciding as to whether or not to accept a risk is a material fact. As this Court held in Satwant Kaur [Satwant Kaur Sandhu v. New India Assurance Co. Ltd., (2009) 8 SCC 316 : (2009) 3 SCC (Civ) 366] “there is a clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance”. Each representation or statement may be material to the risk. The insurance company may still offer insurance protection on altered terms.

32. In the present case, the insurer had sought information with respect to previous insurance policies obtained by the assured. The duty of full disclosure required that no information of substance or of interest to the insurer be omitted or concealed. Whether or not the insurer would have issued a life insurance cover despite the earlier cover of insurance is a decision which was required to be taken by the insurer after duly considering all relevant facts and circumstances. The disclosure of the earlier cover was material to an assessment of the risk which was being undertaken by the insurer. Prior to undertaking the risk, this information could potentially allow the insurer to question as to why the insured had in such a short span of time obtained two different life insurance policies. Such a fact is sufficient to put the insurer to enquiry.” (underlining by us)

10. In another judgment of Hon’ble Supreme Court in the matter of Oriental Insurance Company v. Mahendra Construction [2019 INSC 444: (2019) 18 SCC 209], Hon’ble Supreme Court has reiterated that the insured is under obligation to disclose all relevant information including previous insurance and claims, if any while applying for a new insurance policy. Such non- disclosure is concealment of material fact and is a valid ground for repudiation of the claim. In Mahendra Construction (supra), Hon’ble Supreme Court held as under:

“11 … Insurance is governed by the principle of utmost good faith, which imposes a duty of disclosure on the insured with regard to material facts.

 

12 The burden cannot be cast upon the insurer to follow up on an inadequate disclosure by conducting a line of enquiry with the previous insurer in regard to the nature of the claims, if any, that were made under the earlier insurance policy. On the contrary, it was the plain duty of the respondent [insured] while making the proposal to make a clear and specific disclosure.

15. … This suppression goes to the very root of the contract of insurance which would validate the grounds on which the claim was repudiated by the insurer.”

11. Ld. Advocate for the Complainants has relied on the recent judgment of Hon’ble Supreme Court in the matter of Mahalkali Sujatha vs Future Generali India Life Insurance Company [II (2024) CPJ 66 (SC)] in support of his arguments that burden of proof lies with the insurance Company to prove that the DLA was having the ailment prior to the purchase of policy. But this judgment is not going to help the Complainants herein as the Complainants in the complaint itself has disclosed that the previous hospitalisation for PTCA and CAD were disclosed to the OPs at the time of lodging the claim. Further, in the Mahalaki (supra) case, the OP insurance company was not able to establish the ground for repudiation by documentary evidences. But in the case in hand, it is admitted position that the DLA has undergone PTCA and CAD procedures prior to purchase of the policy and the same was not disclosed in the proposal form at the time of purchase of policy.
12. In a recent judgment on identical facts, Hon’ble National Commission in the matter of Isnaka Devasenamma vs Max Life Insurance Company and others [FA No. 664/2022, decided on 03.07.2024] has relied on the judgments of Hon’ble Supreme Court in the Rekhaben case (supra) and other matters and held that the suppression of facts in the proposal form renders the insurance policy voidable at the option of the insurer. Hon’ble National Commission also opined that the liability of insurer cannot be fixed for repudiation of claim when the insured/ DLA has supressed material information from the proposal form.
13. It is clear from the judgment of Hon’ble Supreme Court in Rekhaben case (supra) and Mahindra Construction case (supra) and judgment of Hon’ble National Commission in the Isnaka Devasenamma case (supra) that the when the insured purchased the policy in question, non-disclosure of his previous health condition in the proposal form was clearly a case of suppression, untruth or inaccuracy in the statement of the DLA and the same is a valid ground for repudiating the claim filed by the Complainants herein.
14. Therefore, we do not find any infirmity in the repudiation of the claim and cancellation of the health insurance policy by OP-2 herein. Accordingly, we do not find any merit in this complaint. Resultantly, this complaint is dismissed at admission stage itself being devoid of merit. No costs.
15. Office is directed to supply the copy of this order to the parties as per rules. Office is also directed to return all original documents filed by the Complainant, if any, after keeping copies of the same in the record. Thereafter, file be consigned to the record room.

 

                                                                                     

___________________________

Divya Jyoti Jaipuriar, President

 

 

___________________________

Ashwani Kumar Mehta, Member

 

 

___________________________

Harpreet Kaur Charya, Member\