Charanjit Singh, President;

1        The present complaint has been received from the District Consumer Disputes Redressal Commission Amritsar by the order of the Hon’ble State Consumer Disputes Redressal Commission Punjab, Chandigarh for its disposal.

2        The complainant has filed the present complaint by invoking the provisions of Consumer Protection Act under Section  12 against the opposite parties on the allegations that  The complainant purchased EASY  HEALTH  FLOATER  POLICY, a product of opposite party first time in Feb. 2011 payment of premium and this policy includes family member of the complainant namely Sunita wife and Madhavi daughter of the complainant.  Thereafter the complainant got renewed the said policy before expiry of it's renew date and paid premium to the opposite party as per their scheme. Last time policy was got renewed for two years w.e.f. 22.22.2017 to 21.2.2019 on payment of premium of Rs.35076.64  for which policy No. 110900/11111/1000169052-07 was issued to the complainant by the opposite parties. The complainant had hired the services of the opposite parties on payment of premium at Amritsar. The complainant was diagnosed gall stones in Ultrasound taken of the complainant on 19.7.2017 and thereafter he was admitted in Dr. Punj's Artemis Hospital at Amritsar on 23.7.2017 and lead for cashless service against above policy of the complainant was sent to the opposite party but the opposite party has repudiated pre-authorization ID 3660540/1 of complainant vide letter dated 24/7/2017 on the pretext that as per the available documents, they had observed that there is a non-disclosure of ailment. However, opposite party in this letter further pleaded that cashless denial in no way indicates denial of claim. The complainant was operated for gall stone disease in the said hospital on 23.7.2017 and was discharged from hospital on 25.7.2017. The complainant paid hospital charges to the tune of Rs. 30,000/- from his own pocket. Besides this the complainant also spent money from his pocket on medical tests, ultrasound, medicines, pre and post operation consultation and medicines expenses, amounting to Rs. 9831. And as such the complainant has spent total Rs. 39831 from his pocket on the operation and treatment, which the complainant  is entitled under the above policy from the opposite parties.  Before the complainant submits his medical claim to the opposite party for payment of sum spent against his insurance policy No. 110900/11111/1000169052-07 which is in force from 22-2-2017 to 21-2-2019, the complainant was surprised to receive letter from opposite party for termination of policy of the complainant on the pretext that Complainant known case of Diabetes Mellitus since 15 years and further forfeited the amount of premium of Rs.35076.89 Paise.  The complainant was very much distressed because he is regularly paying huge amount as premium for his health policy and was under the confirmed view that he and his family is insured for medical treatment in case of any future ailments. The complainant is member of the health policy since 2011 and he was enrolled for health insurance in the year 2011 after proper medical test and report of medical representative of the opposite party. During the period of six years the opposite party continuously received premium from the complainant without raising any objection about alleged pre-discloser and when the time came for payment of claim the opposite party first of all refused cashless facility and later on arbitrarily, illegally and unlawfully terminated the policy and forfeited the premium of the complainant and has caused serious prejudice to the complainant.  Dr.Punj's Artemis Hospital, where operation of the complainant was done for gall stones, had issued a certificate clearly confirming that 'gall store disease is not related to diabetes mellitus. Under the medical terminology 'diabetes' itself is not a disease. The opposite parties with their above acts of unfair trade practice and deficiency in service has caused mental tension, harassment, agony besides financial loss to the complainant. The complainant approached the opposite party at their Amritsar office along with Medical certificate issued by hospital and all other relevant bills/cash memos, diagnostic reports and requested them to reconsider the termination letter of the policy and accept the claim documents for its payment but the opposite party has refused to accept the same and rather humiliated and harass him in their office by saying indecent words in presence of staff members and customers present in office at that time.  The complainant prayed the following reliefs:-

(i)      The opposite party be directed to restore the Health Insurance Policy no. 110900/11111/1000169052-07 of the complainant and withdraw their termination letter;

(ii)     The opposite party be directed to receive claim documents of the complainant and pay the claim amount of  Rs. 39831 of the complainant along with interest @ 12% p.a.

(iii)    The opposite party be directed to pay compensation of Rs.50000/- for causing mental tension, harassment and agony to the complainant by their above acts of unfair trade practice and deficiency in service.

(iv)    Litigation expenses of present complaint be also sanctioned in favour of the complainant.

3        After formal admission of the complaint, notice was issued to Opposite Party and opposite party appeared through counsel and filed written version and contested the complaint by interalia pleadings that  the insured willfully and fraudulently concealed the material facts regarding her health condition at the time of purchase of the insurance policy and filling the Proposal Form on 19.02.2011. The insured gave wrong answers to the questions of the personal statement submitted at the submission of the proposal for purchase of insurance product knowing well that those were incorrect and he stated that he is in good health. The cashless request was reviewed upon received of documents it was revealed that the complainant was not keeping good health prior to the purchase of the insurance policy as the complainant had not disclosed the fact regarding the medical history details of Diabetes Mellitus since 15 years while taking the proposal form as per treatment history sheet provided. Therefore it is evident that the complainant was prejudicial to the contents of "Uberrima Fides' which is the basis of all Insurance contracts. Moreover, the fact of ill health was well within the knowledge of the complainant and it was a willful suppression to obtain insurance fraudulently. Therefore on the strength of above factors, the Opposite Party repudiated the liability under the said policy and conveyed to the complainant vide letter vide letter dated 30.08.2017as void ab initio. The Complainant is not entitled to any relief in equity, since he has not approached this Hon'ble Forum with clean hands and is guilty of concealing material facts. In the History Sheet it is clearly mentioned that Complainant had history of Diabetes Mellitus since 15 years. It is submitted that based on said non-disclosure of the material facts at the time of availing the policy, the Cashless request was rejected by the Opposite Party Insurance Company and in view of the false and misleading statements and assertions of the Complainant; present complaint is liable to be dismissed.  The complainant is debarred to file the instant complaint due to her own act and conduct. The complainant tried to defraud the opposite party and knowingly concealed the health conditions of the insured at the time of submission of the claim which clearly reveals that mala fide intention of the complainant to grab the public money. The complainant had willfully and wrongly with ill intention concealed the material facts regarding the past medical history at the time of filling the Proposal Form for taking the insurance policy and as such the said policy was declared null and void under the  provisions of Indian Contract Act, 1872 as well as per the terms and conditions of the insurance contract. The complaint is liable to be dismissed being uncalled for, unwarranted and misuse of the judicial process. The complainant is estopped to file the instant complaint as there is no deficiency in service on the part of the Opposite Party as defined in Section 2(1)(g) of the Consumer Protection Act, 1986 under the heading Deficiency. The insurance policy is a 'De Novo' contract i.e. it is a contract of  UTMOST GOOD FAITH technically known as "UBERRIMA FIDES". According to this doctrine the proposer who is one of the parties of the contract, is presumed to have means of knowledge, which are not accessible to the opposite party, who is the other party to the contract. Therefore the proposer is bound to disclose everything affecting the judgment of the insurer, no matter howsoever unimportant it may seem to him/her (proposer.). In all the contracts of insurance, the proposer is bound to make full disclosure of all the material fact and not merely those which he thinks material and misrepresentation, non-disclosure or fraud in any document leading to acceptance of the risk automatically discharges the insurer from all liabilities under the contract. The said policy as such became null and void as per terms and conditions of the insurance contract. At the time of submission of the proposal and statement regarding health for obtaining the insurance policy, the Proposer is bound to make full disclosure of all the facts relating to his/her health but the insured deliberately gave false answers to the questions of the proposal form. Had he mentioned the true state of health while answering questions of the proposal form the contract of insurance would have not been effected.  The respondent company acts as a custodian of the funds of public and therefore in order to protect the policy holders, it has to be at all times vigilant in ensuring that only admissible claims under the policy are paid. The respondent opts for the best trade practices and always acts in the interest of its policy holders, but at the same time it seeks to protect itself from the mischief of the policy holder. The claim paid by any Insurance Company goes out of the common pool of funds belonging to all policyholders of the Company and the Insurance Company has to check the validity of a claim as per the terms and conditions of the policy before honouring it. The Insurance Company cannot do injustice to genuine policyholders by allowing ingenious and invalid claims. The complaint against the Opposite party does not lie before the Hon'ble Forum under the Consumer Protection Act 1986 with regard to the rejected Cashless request. The matter is also to be decided by a civil court at full scale trial requiring the complete pleadings and evidence according to law the summary trial under the Consumer Protection Act, 1986 is not the proper remedy for the complaints.  the Complainant had approached the Opposite Party Company for availing Insurance Policy. As per the process involved, the Complainant has submitted Proposal Form bearing No. 1100941307 dated 19.02.2011 for issuance of an insurance policy namely Easy Health Floater Standard Policy so as to provide an insurance cover to himself, his wife, his Son and his Daughter. The Policyholder/Complainant had signed and submitted the Proposal Form after going through the terms and conditions of the policy. The details of the Policy were also explained to him by the insurance agent/sales representative. The Policyholder had full knowledge of the terms and conditions of the Policy and only after going through the application for Insurance, thoroughly and properly, had signed the proposal form. The Complainant in Serial No. 6 (Medical and Life Style Information) had ticked at "No" to all the answers with regard to all the Proposed Insureds thereby giving incorrect information to the Opposite Party and concealing the material fact of his health condition. It is submitted that each and every question put in the proposal form is required to be answered with full honesty giving details, as based on only such declarations of the insured the insurance companies issue policies giving risk cover. The believing the above said declaration, information and details provided including the medical history by the Proposer in the Proposal Form to be true, correct and complete in all respect, giving due credence to the under writing norms of Company, a Policy No. 110600/11051/1000169052 commencing from 22.02.2011 till 21.02.2012 was issued for sum assured opted as per Proposal Form, to the Proposer. Policy was further renewed till the period 22.02.2017 to 21.02.2019. It is further submitted that the Policy Kit containing all relevant documents including the copy of Proposal Form were duly received by the policyholder thereby giving an opportunity to Complainant/Policyholder to verify and examine the benefits, terms and conditions of the Policy taken by him. The complainant/proposer never approached the Company stating that any information given in the documents in the Policy Kit was incorrect or any medical condition under Medical and Life Style Information disclosed but not mentioned in Proposal Form or any term and condition therein is not understandable or acceptable to him within the free look period i.e. 15 days from the receipt of the policy document. As no objection was received from the Complainant, therefore the Complainant is strictly bound by the terms and conditions of the policy. The Proposal Form is the basis of the insurance contract. The decision of the Insurance Company whether to grant insurance cover to the applicant/proposer solely depends upon the various facts, disclosure, information, statements and declarations made by the applicant/proposer in the Proposal Form. Further the various terms of the insurance contract/cover including the premium amount,  maturity amount etc. depends solely upon the said facts, disclosure, information, statements and declarations in the Proposal Form. It is submitted that one great principle of Insurance Law is that a contract of insurance is based upon utmost good faith, "Uberrima Fides". Therefore, the principle underlying the doctrine of disclosure and the rule of good faith obliges the proposer to answer every question put to him with complete honesty  and Honesty implies Truthfulness. It is submitted that in the present case, later it was revealed that the material fact pertaining to the Complainant being suffering from DIABETES MELLITUS SINCE 15 YEARS was knowingly and deliberately suppressed by the Complainant at the time of applying for the subject policy, therefore present complaint is not maintainable and liable to be dismissed. On 23.07.2017 cashless was received from Dr Punj's Artemis Hospital, Amritsar for Complainant who got admitted with c/o Cholelithiasis and probable diagnosis Cholelithiasis with Date of Admission 23 Jul 2017 and estimated duration of stay of 2 days and estimated cost of Rs 35,000/-.  Post scrutiny of the documents it was noted that the History of Diabetes Mellitus since 15 Years. This material fact was not disclosed to us at the time of policy inception. Hence the Cashless request was rejected stating "As per the available documents, we have observed that there is a non-disclosure of DM which may have an impact on policy and hence cashless approval would not be possible at this juncture."  With reference to the policy and claim the company have carefully reviewed all relevant documents submitted by complainant and those available with the company and the following material facts with regard to the Complainant History of Diabetes Mellitus since 15 Years. The fact about the health condition of insured Complainant were never disclosed to the company at the time of application for health insurance coverage (Proposal Form no. 1100941307 dated 19.02.2011 and the said condition is material to the company from underwriting perspective. In view of the above suppression of material facts the company served a notice of 30 days for termination of the Policy (from last renewal date) and further it was duly mentioned that insured are not entitled for any benefit under the Policy and the premium paid stands forfeited. In furtherance of the termination letter, the Policy of the complainant was also cancelled.  The opposite party has denied the other contents of the complaint and prayed for dismissal of the same.

4        The Ld. counsel for the complainant has placed on record affidavit of complainant Ex. C-1 alognwith documents Ex. C-2 to Ex. C-32 and closed the evidence.  Ld. counsel for the opposite party tendered in evidence documents Ex. OP1A to OP114, affidavit of Deepti Rustagi Ex. OP1 and closed the evidence.

5        We have heard the Ld. counsel for the parties and have gone through the record on the file.

6        In the present case, it is not disputed that the complainant has taken insurance policy from the opposite party. It is also not disputed that the complainant fell ill and he has taken the treatment.  The opposite parties have repudiated the claim of the complainant vide denial of cashless service dated 24.7.2017 Ex. C-17 and reason in the said letter is mentioned as follows:-

As per the available documents, we have observed that there is a non disclosure of DM (ailment) which may have an impact on policy and hence cashless approval would not be possible at this juncture.

In this way, the opposite parties have denied the claim of the complainant on the ground that there is a non disclosure of DM (ailment) which may have an impact on policy. The opposite party has further placed on record one letter dated 24.7.2017 i.e. of the same date under the subject of notice for termination under Section VIIj of your Easy Health Policy No. 1000169052-07.  In Ex. OP-12 the opposite parties have pleaded that Mr. Jagdish Kumar known case of Diabetes Mellitus since 15 years.  The health condition of the insured member were never disclosed to us at the time of application for health insurance coverage. In view of the above suppression of material fats we hereby serve you this notice of 30 days for termination of your policy (from last renewal date) Please note you are not entitled for any benefit under the Policy and the premium paid by you stands forfeited.  But this shows that when the complainant has requested for cashless facility firstly the opposite parties denied the cash less facility and later on the opposite parties terminated the policy of the complainant. The above said letters show that the opposite parties are not willing to give the claim to the complainant on the ground that the complainant is a known case of Diabetes Mellitus since 15 years.  The diabetes is not a material disease, therefore, non disclosure thereof is not a concealment. We draw support from Life Insurance Corporation of India Vs. Sushma Sharma from II (2008) CPJ 213 wherein Hon'ble State Commission has held as under:-

“So far as hypertension and diabetes is concerned, no doubt, it is a disease but it is not a material disease. In these days of fast life, majority of the people suffer 14 from hypertension. It may be only the labour class who work manually and take the food without caring for its calories that they do not suffer from hypertension or diabetes. Out of the literate and educated people particularly who have the white collar jobs, majority of them suffer from hypertension or diabetes or both. If the Life Insurance Companies are so sensitive that they consider hypertension and diabetes as material diseases then they should wind up their business and stop accepting premium. If these diseases had been material Nand Lal insured would not have survived for 10 years after he started suffering from these medical problems. Like hypertension ,diabetes has also infected a majority of the Indian population but the people who suffer from diabetes and continue managing it under the medical advice, they survive for number of years and none of these diseases is fatal and as discussed above, if these diseases had been material deceased Nand Lal insured would not have survived for 10 years.”.

We further draw support from Life Insurance Corporation of India Vs. Sudha Jain II (2007) CPJ 452 wherein Hon'ble Delhi State Consumer Disputes Redressal Commission, New Delhi has held that maladies like diabetes, hypertensions being normal wear and tear of life, cannot be termed as concealment of pre-existing disease.  Moreover, the opposite party has failed to establish the relation between fractured neck treatment and DM Type II and HTN. The complainant has not suffered and treated for DM Type and HTN.

7        Not only this, the Opposite Parties could not examine any medical practitioner/ doctor who has treated the life assured for diabetes nor the Opposite Parties have filed any affidavit of any doctor who has medically treated the life assure for the disease prior to taking of the policy. It has been held by the Hon'ble National Commission in case New India Assurance Co. Ltd & Anr Vs. Murari Lal Bhusri 2011(III) CPJ 198 (NC) that where the Insurance company failed to produce any evidence to show that respondent was aware of any pre-existing disease at the time when insurance policy was taken, opposite party was not justified in repudiating the claim of the complainant on the ground of pre-existing disease. It has been held by the Hon'ble Supreme Court of India in case P.Vankat Naidu Vs. Life Insurance Corporation of India & Anr 2011(3) CPC 350 that where no cogent evidence was produced by the respondent to prove that insured/deceased had concealed any fact about his illness or hospitalization, it was held that no material fact was suppressed by the deceased in this respect. It has been held by the Hon'ble State Commission of Punjab in case Life Insurance Corporation of India Vs. Miss Veenu Babbar and another 2000(1) CLT 619 that repudiation on the basis of history recorded in the hospital records is illegal and arbitrary and the same could not be treated as substantive material to base any decision. Same view has been taken by the Hon'ble National Commission in case Life Insurance Corporation of India & Ors. Vs. Kunari Devi IV(2008) CPJ 89 (NC) that where no document has been produced in support of allegation of suppression of disease at the time of taking policy or revival of policy, history recorded in hospital's bed ticket, not to be treated as evidence as doctor, recording history not examined, suppression of disease not proved, insurer was held liable under the policy. It has further been held by the Hon'ble National Commission in case Sahara India Life Insurance Co. Ltd. & Anr Vs. Hansaben Deeepak Kumar Pandya IV(2012) CPJ 13(NC) that where the opposite party insurance company has failed to produce on record any evidence to show that deceased insured ever consulted doctor for taking treatment of heart disease, the repudiation of the claim on the ground of suppression of material fact is totally illegal. It has been held by Hon’ble State Consumer Disputes Redressal Commission, Chandigarh in case titled as Ashwani Gupta & Ors. Vs. United India Insurance Company Limited 2009(1) CPC page 561 that where the claim of the complainant has been repudiated on the ground that the assured had pre-existing disease of diabetes mellitus which was not disclosed- apparently, burden to prove lies upon the insurer- If assured was suffering from pre-existing disease why insurer had not checked it at the time when proposal form was accepted by its staff-Respondent has failed to fulfill this requirement before repudiating the claim and the appellant was held entitled to claim alongwith interest @ 9%. In the present case, the Opposite Party has simply relied upon the history of the life assured recorded at the time of his admission in the hospital

8        The opposite party has cancelled the policy in question merely on the ground that the history sheet of the patient which belongs to Dr. Punj’s Artemis Hospital & Manokamna Fertility Center where it is written that the patient is known case of DM for the last 15 years but it remained unexplained that on whose instance the history sheet of the patient was written. The certificate issued by Dr. Punj’s Artemis Hospital & Manokamna Fertility Center Ex. OP/13, it is written that Mr. Jagdish 52 years is known case of DM for 15 years. Moreover, this letter is signed on behalf of Dr. Punj’s Artemis Hospital & Manokamna Fertility Center and no name is mentioned of the concerned doctor with his qualification. As such this certificate is inadmissible in evidence. The opposite party has not produced on record that the complainant is known case of DM for the last 15 years and he is taking treatment for the same. Moreover, the patient was detected to have Cholethiasis which has no relation with D.M. As such there is no nexus between the DM and said alleged disease. Moreover, the patient is 52 years and it was the duty of the opposite parties to medically examine the insured before issuance of insurance policy in question.  In support of his contention Ld.counsel for the complainant placed reliance upon I.R.D.A.I Rules and Instructions with regard to thorough medical examination if the insured is more than 45 years which is reproduced as under:-

“As per instructions issued by the Insurance Regulatory and Development Authority of India (IRDAI), it was bounded duty of the insurer to put insured to thorough medical examination in case Mediclaim insured was more than 45 years and if insurance company failed to do so then insurance company has no right to decline the insurance claim on account of non disclosure of the facts of pre existing disease when the policy was taken. The above observations is supported by law cited in SBI General Insurance Company Limited Vs. Balwinder Singh Jolly” 2016(4) CLT 372 of the Hon’ble State Commission, Chandigarh.”

9        In such a situation the repudiation made by the Opposite Party regarding the genuine claim of the complainant appears to have been made without application of mind. It is usual with the insurance company to show all types of green pesters to the customer at the time of selling insurance policies, and when it comes to payment of the insurance claim, they invent all sort of excuses to deny the claim. In the facts of this case, ratio of the decision of Hon‟ble Apex Court in case of Dharmendra Goel Vs. Oriental Insurance Co. Ltd., III (2008) CPJ 63 (SC) is fully attracted, wherein it was held that, Insurance Company being in a dominant position, often acts in an unreasonable manner and after having accepted the value of a particular insured goods, disowns that very figure on one pretext or the other, when they are called upon to pay compensation. This „take it or leave it‟, attitude is clearly unwarranted not only as being bad in law, but ethically indefensible. It is generally seen that the insurance companies are only interested in earning the premiums and find ways and means to decline claims. In similar set of facts the Hon’ble Punjab & Haryana High Court in case titled as New India Assurance Company Limited Vs. Smt.Usha Yadav & Others 2008(3) RCR (Civil) Page 111 went on to hold as under:-

 “It seams that the insurance companies are only interested in earning the premiums and find ways and means to decline claims. All conditions which generally are hidden, need to be simplified so that these are easily understood by a person at the time of buying any policy. The Insurance Companies in such cases rely upon clauses of the agreement, which a person is generally made to sign on dotted lines at the time of obtaining policy. Insurance Company also directed to pay costs of Rs.5000/- for luxury litigation, being rich.

10      In view of above discussion we partly allow the present complaint and the opposite parties are directed to pay Rs. 39,831/- to the complainant.  The complainant has been harassed by the opposite parties unnecessarily for a long time. The complainant is also entitled to Rs. 7,500/- ( Rs. Seven Thousand and Five Hundred only) as compensation on account of harassment and mental agony and Rs. 7,500/- ( Rs. Seven Thousand and Five Hundred only) as litigation expenses. The opposite Parties are directed to comply with the order within one month from the date of receipt of copy of the order, failing which the complainant is entitled to interest @ 9% per annum, on the awarded amount, from the date of complaint till its realisation.  However, prayer qua the restoration of the policy cannot be allowed as the complainant has enjoyed the risk covered for the said period. Copy of order will be supplied by District Consumer Disputes Redressal Commission, Amritsar to the parties as per rules. File be sent back to the District consumer Disputes Redressal Commission, Amritsar.

Announced in Open Commission

21.10.2022