IN THE STATE COMMISSION: DELHI
(Constituted under section 9 of the Consumer Protection Act, 1986)
Date of Hearing:09.08.2021
Date of Decision:31.08.2021
First Appeal No. 67/2014
IN THE MATTER OF
THE ORIENTAL INSURANCE COMPANY LTD.,
28/12, East Punjabi Bagh,
-
New Delhi-110007
THROUGH ITS REGIONAL MANAGER,
Regional Office No. 2
Scope Tower Complex,
VERSUS
SHRI ASHOK BHALLA,
13/25, Subhash Nagar,
New Delhi-110027 ....Respondent
HON’BLE SH. ANIL SRIVASTAVA, MEMBER
1. Whether reporters of local newspaper be allowed to see the judgment? Yes
2. To be referred to the reporter or not? Yes
Present: Sh. R.N. Sharma, Counsel for the Appellant
None for the respondents even in the second call
ANIL SRIVASTAVA, MEMBER
JUDGEMENT
- The order dated 28.11.2013 passed by the Consumer Disputes Redressal Forum III, Janakpuri, New Delhi in CC-235/09 in the matter of Ashok Bhalla, versus M/s Oriental Insurance Co. Ltd. and anr, allowing the complaint and directing the insurer to settle the claim of the insured on his completing requisite formalities as also compensation of Rs. 20,000/- for the hardship done to him, has been assailed by way of an appeal under Section 15 of the Consumer Protection Act 1986, the Act, by the insurer, for short appellant, against the insured, alleging that the impugned is bad in law and praying for setting aside the order so passed and for dismissal of the complaint.
- Facts of the case necessary for the adjudication of the appeal are these.
- The respondent had taken a Medical Insurance Policy for the first time after submitting duly signed proposal form dated 16.10.2006 for one year w.e.f. 16.10.2006 to 15.10.2007. This policy was renewed for a period of one year vide policy no. 271900/48/2009/2187. A claim was preferred by the respondent in December, 2008 after a gap of thirty days intimating the TPA that the complainant’s wife was admitted to Sh. Balaji Action Medical Institute on 02.11.2008 for treatment and was discharged on 07.11.2008. The respondent while preferring the claim had submitted claim papers relating to hospitalisation i.e. Discharge Summary and Medical Bills in 3rd week of December, 2008 when on scrutiny it was noticed the respondent was treated for the same disease in the year 2005 when the patient was found to be a case of CLD with PHT the fact which had been concealed from the Forum leading to passing of the impugned order. The appellant in these circumstances came to the conclusion that the claim of respondent herein is not payable/maintainable under the terms of contract on account of PRE-EXISTING DISEASE, CONCEALMENT OF THE FACTS AND MATERIALS relating to pre-existing disease and thus the appellant repudiated the claim giving reasons therefor, but these facts were not considered by the Forum.
- In these circumstances the complaint filed before the District Forum against the insurer was allowed leading to filing of appeal assailing the orders so passed on the ground that the ld. District Forum erred on both facts and law and passed the arbitrary and illegal order ignoring the supporting evidences though placed by them. Secondly, District Forum has passed the order without considering the specific pleadings/documents i.e. discharge summary of the Hospital otherwise an important document. Thirdly, the District Forum have merely relied upon the affidavit of respondent/complainant ignoring their evidence. Finally, the District Forum has totally erred in directing them to settle the claim of the insured otherwise not payable under the terms of contract of insurance.
- Respondents were noticed but they having not filed the reply to the appeal, their right to file the reply was closed vide this Commission order dated 18.05.2016.
- This matter was listed before this Commission for final hearing on 09.08.2021 when the counsel for the appellant appeared and advanced his arguments pressing for setting aside the impugned order since, according to them, the same is not sustainable. No appearance was made on behalf of the respondents. The subject matter being of the year 2014 orders were reserved granting liberty to the respondents to file their synopsis on or before 17.08.2021 but nothing was filed. I have perused the records of the case and considered the rival contentions involved in this case.
- Short question for adjudication in this appeal is whether the orders passed by the District Forum approving the claim of the respondent/complainant suffers from infirmity. This leads to another question whether the grounds for repudiation of the claim taking the plea that the complainant/respondent has concealed the factum regarding pre-existing disease while obtaining the policy, are sustainable.
- In the first instance, delay in filing the appeal for the reasons contained in the application praying for the condonation of delay, is condoned.
- I may now advert to the letter of repudiation dated 19.12.2008
RE: Mediclaim Policy No. 271900/48/2009/2187 A/c Mr. Ashok Bhalla
Patient: Self Claim file No. 20081213B001R4A1781
This claim is not admissible and hence repudiated.
In this claim you were admitted to Sh. Balaji Action Medical Institute on 02.11.2008 and got discharged on 07.11.2008. The diagnosis as per the discharge summary was CLD with PHT with Febrile Illness.
From the discharge summary we found that you had a history of UGI bleed in 2005 and alcoholic + from the ultrasound report dated 03.11.2008 you are a known case of CLD with PHT.
As per records available with us you were covered under the Medicalim Policy since 16.10.2006.
This means that the disease for which treatment is received was pre-existing at the time of taking this policy for the first time on 16.10.2006.
All pre-existing diseases are excluded vide Exclusion Clause No. 4.1 of the policy. Under these circumstances, this claim is not admissible and therefore we repudiate the claim under Section 4.1 of the Mediclaim Policy.
From the above we also understand that you have a habit of consuming alcohol which is one of the major factor for CLD. This is an exclusion under Mediclaim Policy vide clause no. 4.8 of the Policy.
Hence under above circumstances we repudiate this claim under exclusion clause no. 4.1 and 4.8 of the policy.
- Primarily there are two grounds of repudiation, namely,
- Concealment of facts and materials with regard of pre-existing disease; and secondly,
- Delay in filing the claim.
- The ground regarding delay in preferring the claim within 30 days as contemplated under condition number 5.4 of the policy is not sustainable keeping in view the orders passed by the Hon’ble Supreme Court of India in matter of Gurshinder Singh versus Shriram General Insurance Co. Ltd. and ors as reported in I [2020] CPJ 57 (SC) holding that the ground of delay cannot be a ground to repudiate the claim.
- Reverting to the repudiation done on the ground of concealment of the material fact regarding pre-existing disease, I may advert to clause 4.1 of the policy which reads as under:-
“Such diseases which have been in existence at the time of proposing this insurance. Pre-existing conditions means any injury which existed prior to the effective date of this insurance. Pre-existing condition also means any sickness or its symptoms which existed prior to the effective date of this insurance, whether or not the insured person had knowledge that the symptoms were relating to the sickness. Complications arising from pre-existing disease will be considered part of that pre-existing condition.”
- Past history of the patient as reported in the Discharge summary in as under:-
Past History
H/O UGI Bleed in 2005
No H/O HTN/DM/CAD
- Insurance like any other is a contract as held by their Lordship in the matter of Oriental Insurance Co. Ltd. versus Sony Cherian as reported in II [1999] CPJ 13 (SC) observing as under:-
“The Insurance Policy between the insurer and the insured represents a contract between the parties. Since the insurer undertakes to compensate the loss suffered by the insured on account of risks covered by the insurance policy, the terms of agreement have to be strictly construed to determine the extent of liability of the insurer. The insured cannot claim anything more than what is covered by the insurance policy.”
- Coming to the facts of the case on merit, it is statement of fact that the respondent/complainant was in possession of the policy during the period of treatment. From the discharge summary it is evident that the patient was under treatment around the time the policy was obtained. Suppressing this factum while obtaining the policy tantamount to concealment. Concealment of a material fact is a legitimate ground to negate the claim. The Hon’ble NCDRC in the matter of Seema Begum versus HDFC Standard Life Insurance Company Ltd. and ors as reported in I [2020] CPJ 411 (NC) is pleased to hold as under:-
“The deceased having withheld a material information with respect to State of his health and such withholding of information having influenced decision of the insurer on the question as to whether the insurer cover should be given to him or not, insurer is not liable to make payment to the complainant in terms of the Insurance Policy taken by him.”
Their Lordship in the Apex Court have also taken same view in the matter of Reliance Life Insurance Co. Ltd. and anr. versus Rekhaben Nareshbhai Rathod as reported in II [2019] CPJ 53 (SC) holding as under:-
The expression “material” in the context of an insurance policy can be defined as any contingency or event that may have an impact upon the risk appetite or willingness of the insurer to provide insurance cover. In MacGillivray on Insurance Law (Twelfth Edition, Sweet and Maxwell (2012). See Pg. 493 for cases relied upon] it is observed thus:-
The opinion of the particular assured as to the materiality of a fact will not as a rule be considered, because it follows from the accepted test of materiality that the question is whether a prudent insurer would have considered that any particular circumstance was a material fact and not whether the assured believed it so ...‖ Twelfth Edition, Sweet and Maxwell (2012). See Pg. 493 for cases relied upon.
Materiality from the insured’s perspective is a relevant factor in determining whether the insurance company should be able to cancel the policy arising out of the fault of the insured. Whether a question concealed is or is it not material is a question of fact. As this Court held in Satwant Kaur (supra):
Any fact which goes to the root of the contract of insurance and has a bearing on the risk involved would be ―material
Materiality of a fact also depends on the surrounding circumstances and the nature of information sought by the insurer. It covers a failure to disclose vital information which the insurer requires in order to determine firstly, whether or not to assume the risk of insurance, and secondly, if it does accept the risk, upon what terms it should do so. The insurer is better equipped to determine the limits of risk-taking as it deals with the exercise of assessments on a day-to-day basis. In a contract of insurance, any fact which would influence the mind of a prudent insurer in deciding whether to accept or not accept the risk is a material fact. If the proposer has knowledge of such fact, she or he is obliged to disclose it particularly while answering questions in the proposal form. An inaccurate answer will entitle the insurer to repudiate because there is a presumption that information sought in the proposal form is material for the purpose of entering into a contract of insurance.
Contracts of insurance are governed by the principle of utmost good faith. The duty of mutual fair dealing requires all parties to a contract to be fair and open with each other to create and maintain trust between them. In a contract of insurance, the insured can be expected to have information of which she/he has knowledge. This justifies a duty of good faith, leading to a positive duty of disclosure. The duty of disclosure in insurance contracts was established in a King’s Bench decision in Carter v Boehm19, where Lord Mansfield held thus:
Insurance is a contract upon speculation. The special facts, upon which the contingent chance is to be computed, lie most commonly in the knowledge of the insured only; the under writer trusts to his representation, and proceeds upon confidence that he does not keep back any circumstance in his knowledge, to mislead the under-writer into a belief that the circumstance does not exist, and to induce him to estimate the risque, as if it did not exist.‖ 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. 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 (supra) (1766) 3 Burr 1905 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.
- Having regard to the discussion done I am of the considered view that the decision of the appellant company repudiating the claim preferred by the respondent/complainant, he having not furnished the details of the ailment suffered and treatment done, which details as observed by their Lordship in the matter of Reliance Life Insurance company Limited anr versus Rekhaben (Supra) are material, the concealment of which amounts to violation of policy, cannot be faulted with and if that be the case the appeal deserves to be allowed and the complaint being devoid of merit is dismissed, leaving the parties to bear the cost.
- Ordered accordingly.
- A copy of this order be forwarded to the parties to the case free of cost as is statutorily required. A copy of this order be forwarded to the District Forum for information. File be consigned to records.
(ANIL SRIVASTAVA)
MEMBER
PRONOUNCED ON
31.08.2021
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