Order No. 17 dt. 28/06/2019
The case of the complainant in brief is that the complainant is a senior citizen and obtained a policy from o.p. insurance company being health insurance policy no.495276167. The complainant became ill and he underwent treatment at Apollo Gleneagles Hospital. After recovery the complainant claimed to the insurance company, in relation to the health insurance policy (LIC Jeevan Arogya) for reimbursement of the medical expenses incurred by the insured complainant. The complainant at the time of submission of his claim all the documents were provided to TPA, but unfortunately o.p. insurance company refused to entertain the claim of the complainant. The complainant has also stated that the complainant was asked by o.ps. regarding the health condition of the complainant on numerous occasions and the complainant gave the declaration pertaining to health details and medical information. The o.ps. had issued policy in the name of the complainant after getting all sorts of information provided by the complainant without any objection / disputes to any information provided by the complainant and after realization of the cheque amount towards the premium of the policy issued the policy subsequently. The complainant gave clarification in respect of the queries in respect of o.ps. all through whenever it was made by o.ps. The complainant even visited the office of o.ps. but no fruitful result was achieved, subsequently being frustrated with the inaction of o.ps. the complainant had to file this case. The o.ps. also cancelled the policy without mentioning any cogent reason whatsoever. On the basis of the said fact the complainant filed this case praying for direction upon the o.ps. for acceptance of the premium for renewal of the said policy and the complainant also prayed for settlement of the claim amount as admissible equivalent limits of claim amount of Rs.1 lakh as per the terms and conditions of the policy as well as compensation and litigation cost.
The o.p. nos.1 and 2 contested this case by filing w/v and denied all the material allegations of the complaint. It was stated that o.p. insurance company received the proposal form on 1.6.11 for issuing health insurance policy along with other requisite documents and premium duly filled in and signed by the complainant. After necessary processing o.ps. issued the policy bearing no.495276167 (Jeevan Arogya, Table No.903) and health coverage under the policy was commenced on and from 27.6.11. The complainant submitted the medical papers along with hospitalization claim for hospitalization from 14.6.16 to 17.6.16 for reimbursement of medical benefits under the policy in question.
The insured was required to submit the proposal form wherein it was his duty to disclose correct statements and replies in response to questions asked in the proposal form relating to his health i.e. the same is necessary for issuing the policy. The complainant in the policy proposal form answered “No” in respect of the questions 1, 2, 3, 7, etc. On scrutiny of the record it was noticed that the complainant had undergone operation of mastydectomy on 2.10.08, but the complainant did not disclose the said fact. The complainant has also suppressed the fact that he underwent treatment under Dr. Kalyan Roy since he was suffering from prostatitis and from the prescription dt.22.3.11 PSA was found 7.4% which was the danger level of 4.0. The complainant suppressed the said fact. The complainant was also subsequently treated for various ailment, and non discloser of material information having knowledge of the same is considered as fraud as per Sec. 17 of the Contract Act and also as per the conditions laid down in the policy point itself e.g clause 7.1 exclusion, clause – 15 forfeiture in certain events. Since the complainant suppressed the materials fact of his treatment of his disease for which the life assured was admitted to the hospital. Accordingly, the repudiation of the claim is just and proper and there is no deficiency in service on the part of o.p. nos.1 and 2. In view of the said fact o.p. nos.1 and 2 stated that the claim made by the complainant cannot be entertained so far as the subsequent acceptance of the premium is concerned insurance company is ready to refund the said amount to the complainant and as such, the case is to be dismissed.
The o.p. no.3 contested this case by filing w/v, but he supported the claim of the complainant.
In spite of receipt of notice the o.p. no.4 did not contest this case by filing w/v and as such, the case has proceeded ex parte against them.
On the basis of the pleadings of parties the following points are to be decided:
- Whether the complainant was insured with o.ps.?
- Whether during the subsistence of the policy the complainant became ill and whether he suppressed the material fact of his illness at the time of obtaining the policy?
- Whether there is any deficiency in service on the part of o.ps.?
- Whether the complainant will be entitled to get the relief as prayed for?
Decision with reasons:
All the points are taken up together for the sake of brevity and avoidance of repetition of facts.
Ld. lawyer for the complainant argued that the complainant is a senior citizen and obtained a policy from o.p. insurance company being health insurance policy no.495276167. The complainant became ill and he underwent treatment at Apollo Gleneagles Hospital. After recovery the complainant claimed to the insurance company, in relation to the health insurance policy (LIC Jeevan Arogya) for reimbursement of the medical expenses incurred by the insured complainant. The complainant at the time of submission of his claim all the documents were provided to TPA, but unfortunately o.p. insurance company refused to entertain the claim of the complainant. The complainant has also stated that the complainant was asked by o.ps. regarding the health condition of the complainant on numerous occasions and the complainant gave the declaration pertaining to health details and medical information. The o.ps. had issued policy in the name of the complainant after getting all sorts of information provided by the complainant without any objection / disputes to any information provided by the complainant and after realization of the cheque amount towards the premium of the policy issued the policy subsequently. The complainant gave clarification in respect of the queries in respect of o.ps. all through whenever it was made by o.ps. The complainant even visited the office of o.ps. but no fruitful result was achieved, subsequently being frustrated with the inaction of o.ps. the complainant had to file this case. The o.ps. also cancelled the policy without mentioning any cogent reason whatsoever. On the basis of the said fact the complainant filed this case praying for direction upon the o.ps. for acceptance of the premium for renewal of the said policy and the complainant also prayed for settlement of the claim amount as admissible equivalent limits of claim amount of Rs.1 lakh as per the terms and conditions of the policy as well as compensation and litigation cost.
Ld. lawyer for the o.p. nos.1 and 2 argued that o.p. insurance company received the proposal form on 1.6.11 for issuing health insurance policy along with other requisite documents and premium duly filled in and signed by the complainant. After necessary processing o.ps. issued the policy bearing no.495276167 (Jeevan Arogya, Table No.903) and health coverage under the policy was commenced on and from 27.6.11. The complainant submitted the medical papers along with hospitalization claim for hospitalization from 14.6.16 to 17.6.16 for reimbursement of medical benefits under the policy in question.
The insured was required to submit the proposal form wherein it was his duty to disclose correct statements and replies in response to questions asked in the proposal form relating to his health i.e. the same is necessary for issuing the policy. The complainant in the policy proposal form answered “No” in respect of the questions 1, 2, 3, 7, etc. On scrutiny of the record it was noticed that the complainant had undergone operation of mastydectomy on 2.10.08, but the complainant did not disclose the said fact. The complainant has also suppressed the fact that he underwent treatment under Dr. Kalyan Roy since he was suffering from prostatitis and from the prescription dt.22.3.11 PSA was found 7.4% which was the danger level of 4.0. The complainant suppressed the said fact. The complainant was also subsequently treated for various ailment, and non discloser of material information having knowledge of the same is considered as fraud as per Sec. 17 of the Contract Act and also as per the conditions laid down in the policy point itself e.g clause 7.1 exclusion, clause – 15 forfeiture in certain events. Since the complainant suppressed the materials fact of his treatment of his disease for which the life assured was admitted to the hospital. Accordingly, the repudiation of the claim is just and proper and there is no deficiency in service on the part of o.p. nos.1 and 2. In view of the said fact o.p. nos.1 and 2 stated that the claim made by the complainant cannot be entertained so far as the subsequent acceptance of the premium is concerned insurance company is ready to refund the said amount to the complainant and as such, the case is to be dismissed.
Ld. lawyer for the o.p. nos.1 and 2 in support of their contention cited judgement decided by Hon’ble Supreme Court in Civil Appeal No.53322 of 2007 whereby it was held that the well settled law in the field of insurance is that contracts of insurance including the contracts of life assurance are contracts uberrima of fides and every fact of materiality must be disclosed, otherwise there is good ground for rescission.
Ld. lawyer also relied on another decisions as decided by Hon’ble Supreme Court in Civil Appeal No.2776 of 2002. The same principle of good faith was also explained in the said judgment. Ld. lawyer for the insurance company also cited judgment as decided by Hon’ble National Commission in a case of Panni Devi vs. LICI and others. The same principle of good faith was also described in the said judgment. Ld. lawyer for the insurance company relied on a decision as decided by Hon’ble National Commission in R.P. No.1061 dt.3.8.15 wherein the commencement of risk and dating back of the policies was explained. On the basis of those judgments it was categorically stated that since the complainant suppressed the material fact of his illness and therefore, the claim of the complainant was rightly repudiated by insurance company and no deficiency in service committed by o.ps. On the basis of the said fact o.ps. prayed for dismissal of the case.
Considering the submissions of the respective parties it is an admitted fact that the complainant obtained the said policy from insurance company and during subsistence of the said policy the complainant became ill. The complainant in support of the said contention filed some documents including the medical papers to show that he was admitted to Apollo Gleneagles Hospital. The catena of documents filed by the complainant established the fact that because of his illness he had to take admission in the said hospital and after recovery he submitted the medical bills to TPA for reimbursement of the same. It is an undisputed fact that the complainant was asked by o.ps. on numerous occasions for clarification of all the points which were duly answered by the complainant. Ld. lawyer for insurance company on citing the rulings emphasized that the insured was under solemn obligation to make true and full discloser of information which was within his knowledge, in the proposal form and withholding of such information or making misstatement was a fraudulent act and breach of principle of utmost good faith and the insurer was justified in repudiating the claim under the provisions of Sec. 45 of Insurance Act. It was further submitted that life insurance agents do not act as agents of LICI. The agents work on commission basis, there was no relationship of employer and employee or master – agent between LICI and the agents. In LICI vs. M. Gouri and others, F.A. No.163 / 1993 the Hon’ble National Commission had been pleased to hold that life insurance agent does not act as agent of LICI and acts as an agent of insured for whose benefit the insurance to be obtained.
In United India Insurance Co. Ltd. vs. Harchand Rai Chandanlal, AIR 2004 SC 4974, Hon’ble Supreme Court in para 13 observed that “ It is settled law that terms of the policy shall govern the contract between the parties, they have to abide by the definition given therein and all those expressions appearing in the policy should be interpreted with reference to the terms of the policy and not with reference to the definition given in other laws.
It was also held by Hon’ble Supreme Court in the said judgment that it is settled law that terms of the contract has to be strictly read and natural meaning be given to it. No outside aid should be sought unless the meaning is ambiguous. It is an admitted fact that the policy was obtained in the year 2011 and the insured suffered illness for which he claimed reimbursement of the medical bills in the year 2016 i.e. moiré than two years had elapsed between the date of issue of policy and the date of undergoing treatment. In this respect we can rely on a decision as decided by Hon’ble National Commission in LICI vs. Pramila Malhotra, [NCDRC] I [2004] CPJ 91.
In LICI vs. Smt. Asha Goel it was observed that Sec. 45 of Insurance Act provides, inter alia, that no policy of life insurance effected after coming into force of this Act shall, after expiry of two years from the date of which it was effected, be called in question by an insurer on the ground that statement made in the proposal form for insurance or any report of a medical officer, or referee, or friend of the insured, or any other documents leading to the issue of the policy, was inaccurate or false, unless the insurer shows that the statement was on a material matter or suppressed facts which it was material to disclose that it was fraudulent by made by the policy holder and that the policy holder knew at that time of making it that the statement was false that suppressed facts which it was material to disclose.
In LICI vs. Mahinder Kaur, [NCDRD, New Delhi] Vol-II [2003] CPJ 30 [NC] it was observed that “Repudiation of claim on the ground of concealment of the material fact after two years of policy” prohibited. Ld. lawyer for the complainant has stated that the insurance agent was simply asked to append his signature and all other answers were filled in by the agent, in his own hand writing. The insured cannot be held responsible for concealing any facts. This aspect is well covered by judgment in LICI vs. Bina Joshi, wherein the entries filled by the agents, the policy holders were not blamed for concealing information. Sec. 45 of the Insurance Act provides as follows:
Policy not to be called in question on the ground of misstatement after two years.
45. No policy of life insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement of this Act and no policy of life insurance effected after the coming into force of this Act shall, after the expiry of two years from the date on which it was effected be called in question by an insurer on the ground that statement made in the proposal or in any report of a medical officer, or referee, or friend of the insured, or in any other document leading to the issue of the policy, was inaccurate or false, unless the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the policy-holder and that the policy-holder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose:
Provided that nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal.”
It is very clear that as per Sec. 45 of the Act in force when the proposal was made and policy taken. No insurance policy can be repudiated after two years on the grounds of concealment / suppression of facts. The amendment to Sec.45 providing a period of three years came later in 2014. The present case is covered by the Section 45 before its amendment and accordingly we hold that the repudiation of the claim of the complainant as well as cancellation of the policy is gross deficiency in service on the part of o.p. insurance company and the complainant will be entitled to get the reimbursement of the medical bills as well as compensation and litigation cost.
Thus all the points are disposed of accordingly.
Hence, ordered,
That the CC No.126/2018 is allowed on contest with cost against the o.p. nos.1 and 2 and dismissed on contest without cost against the o.p. no.3 and dismissed ex parte without cost against the o.p. no.4. The o.p. nos.1 and 2 are jointly and/or severally directed to pay the claim of Rs.1,00,000/- (Rupees one lakh) only to the complainant along with compensation of Rs.30,000/- (Rupees thirty thousand) only for harassment and mental agony and litigation cost of Rs.10,000/- (Rupees ten thousand) only within 30 days from the date of communication of this order, i.d. an interest @ 8% p.a. shall accrue over the entire sum due to the credit of the complainant till full realization.
The o.ps. are also directed to restore the policy in question provided, if the premium is paid by the complainant without committing any further delay.
