STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

M/s Oriental Insurance Co. Ltd., SCO 10, First Floor, Sector 7-C, Madhya Marg, Chandigarh through its Branch Manager.

     ---Appellant

V e r s u s

Dr. P.K.Aggarwal s/o Late Sh.Mangat Ram aged 67 years resident of H.No.81, Sector 4, Panchkula.

                        ---Respondent.

Appeal U/s 15 of Consumer Protection Act, 1986

BEFORE:  HON’BLE MR. JUSTICE SHAM SUNDER, PRESIDENT.

                MRS. NEENA SANDHU, MEMBER.

Argued by: Sh. Vinod Chaudhri, Adv. for the appellant

                 Sh. Dinesh Gupta, Adv. for respondent. 

PER HON’BLE MR. JUSTICE SHAM SUNDER, PRESIDENT

1.                  This appeal is directed against the order dated 03.02.2010, rendered by the District Consumer Disputes Redressal Forum-II, UT, Chandigarh (hereinafter to be called as the District Forum only), vide which it accepted the complaint and directed the OP, to pay Rs.1,87,119/- to the complainant (now respondent). It was further directed that the OP (now appellant) shall pay Rs.20,000/- as compensation, for mental agony, harassment etc., besides Rs.5000/- as cost of litigation. It was further directed that, in case, the order was not complied with, by the OP, within one month from the date of receipt of its certified copy, the OP shall also be liable to pay the amount of Rs.1,87,119/- along with penal interest @ 18% p.a. from the date of filing of the complaint i.e. 22.12.2008, till the realization of the same, besides cost of litigation.

2.                  The facts, in brief, are that the complainant took mediclaim insurance policy from OP for the year 1993-94, and thereafter started taking policy from National Insurance Co.  Subsequently on 07.11.2004, he again shifted to Oriental Insurance Co.(OP).  The complainant obtained Good Health Insurance Policy for the period from 09.11.2005 to 08.11.2006, and paid a sum of Rs.5246/- as premium.  According to the complainant, the proposal form was filled up by the OP through its representative. It was further stated that, except for his particulars and the particulars of his wife, no other information, was sought or filled up, by putting any question, to him (complainant). In August, 2006, the complainant felt breathless, and giddiness and he got himself admitted, in Fortis Hospital, New Delhi where certain tests were also conducted, upon him. He remained admitted, in the said hospital, from 29.08.2006 to 05.09.2006, and thus, incurred expenditure of Rs.2,35,000/.  On 18.12.2006, the complainant, submitted his claim for reimbursement of Rs.2,35,000/-, spent by him, on his treatment.  In reply, the OP wrote a letter dated 18.09.2006, stating therein that the complainant underwent coronary and caroted angiography, in 2004, and, sought a copy thereof (angiography). 

3.                  The case of the complainant was that in 2004, he felt hypertension, upon which, he got himself examined at Batra Hospital, New Delhi, where angiography was done, to diagnose the disease. He sent a copy of the discharge summary Annexure C-4, to the OP. Thereafter, the complainant wrote another letter dated 18.12.2006, requesting the OP, to process his claim. The complainant received a letter dated 21.12.2006, wherein, he was informed that, the claim was not payable, under exclusion clause 2.1 of the insurance policy and, therefore, the same was repudiated vide letter dated 14.11.2006, on the ground, that he was suffering from pre-existing disease. He further stated that, hypertension was not a pre-existing disease, and after angiography test, he was advised conservative management. It was further stated that it did not mean that he was suffering from any pre-existing disease. It was further stated that the OP, was, thus, deficient in rendering proper service, and, also indulged into an unfair trade practice. When the grievance of the complainant was not redressed, left with no alternative, he filed a complaint under Section 12 of the Consumer Protection Act, 1986 (hereinafter to be called as the Act only).

4.                  In reply the OP admitted that Good Health Insurance Policy, was obtained by the complainant, and the same was valid for the period from 09.11.2005 to 08.11.2006. It was, however, stated that the complainant purchased Good Health Insurance Policy by misstating the facts, in Clauses 1, 3 and 9, of the proposal form.  It was denied, that the complainant was forced to purchase the policy. It was further stated that, on receipt of the claim form, Sh.B.B.Sharma was appointed to investigate the claim.  The investigator sought opinion from Cardiologist, Dr.N.P.Singh (M.D. Medicine) on 28.10.2006, which reads as under:-

“As per the medical records, Mr.P.K.Aggarwal was diagnosed to have hypertension, Dyslipidaemic, mild atherosclerotic

Mr.P.K.Aggarwal was managed for the cardiac ailments which were pre-existing at the time of the purchase of policy”.

5.                  It was further stated that, the claim of the complainant was not payable, as per the exclusion clause 2.1 of the insurance policy and hence, the same was rightly repudiated, vide letter dated 14.11.2006. It was further stated that the OP, was not deficient in rendering proper service, to the complainant, nor indulged into an unfair trade practice.

6.                  The parties led evidence, in support of their case.

7.                  After hearing the Counsel for the parties, and, on going through the evidence, and record, the District Forum, accepted the complaint, in the manner, referred to, in the opening para of this order, on the grounds, that Dr. N.P. Singh was not the treating Doctor and he did not conduct any test mentioned, in the discharge summary Annexure C-7; that he gave his opinion on the basis of discharge summary; that the discharge summary was not verified by any treating Doctor and, as such, no reliance,  thereon could be placed, to come to the conclusion, that the complainant suppressed the material facts, at the time of inception of the insurance policy, and that he was suffering from any preexisting disease, and, therefore, his case fell within the exclusion Clause 2.1.

8.                  Feeling aggrieved, the instant appeal, was filed by the OP (now appellant).

9.                  We have heard the Counsel for the parties, and have gone through the evidence and record, of the case carefully.

10.               The Counsel for the appellant, submitted that, no doubt, the complainant, in the complaint, stated that he continuously obtained policies from 1993-94, yet copies of only two policies i.e. Medical Insurance Policy, Annexure C-1 from 7.11.2004 to 6.11.2005 and C-3, Good Health Insurance Policy from 9.11.2005 to 8.11.2006, were placed on record. The said Good Health Insurance Policy, was in continuation of the Medical Insurance Policy, Annexure C-1 from 7.11.2004 to 6.11.2005. He further submitted that, in the proposal form, Annexure C-1 of the policy from 7.11.2004 to 6.11.2005, in answer to the questions, as to whether, the complainant was suffering from certain diseases, mentioned in clauses 1,3 and 9, he stated no. He further submitted that, infact, much earlier to 7.11.2004, when the proposal form was submitted by the complainant, in respect of the policy, for the period from 7.11.2004 to 6.11.2005, he had undergone treatment for heart disease, in Batra hospital, but he suppressed this material fact, from the insurer. He further submitted that the discharge summary C-7 of Batra hospital, where the complainant remained admitted from 06.04.2004 to 09.04.2004, was duly verified by Dr. N.P. Singh and he gave his certificate R-4 (on the file of the District Forum). He further submitted that, when the complainant took Good Health Insurance Policy cover note, whereof is C-3 and the terms and conditions whereof are C-11, he was suffering from preexisting disease. He further submitted that according to Clause 2.1, under the heading “Exclusions” the Company was not liable to make any payment, under the policy, in respect of any expenses, whatsoever incurred by the insured, in connection with disease/injuries, which were preexisting, when the cover note incepted for the first time. It was further submitted that it was, under this clause, that the claim of the complainant was repudiated. He further submitted that there was no necessity of producing the affidavit of Dr. N.P. Singh or of any other Doctor of Batra Hospital, where the complainant remained admitted, as it had been admitted by the complainant, in the complaint, himself, that he remained admitted in Batra Hospital for the period referred to above. He further submitted though this fact was very much, in his knowledge, at the time of taking the policy on 7.11.2004, which could be taken as the date of inception, yet he concealed the same, at the time of submitting proposal form, C-1. He further submitted that the complainant, being a doctor himself, could not be expected to sign the blank proposal form. It was further submitted that, thus, the appellant/OP, was not deficient in rendering service, to the complainant nor it indulged into unfair trade practice. He further submitted that the District Forum, was, thus, wrong in accepting the complaint, on flimsy grounds. He further submitted that the order of the District Forum, being illegal, is liable to be set aside.

11.              On the other hand, the Counsel for the complainant/respondent, submitted that the complainant was not suffering from any preexisting disease, at the time of taking the Good Health Insurance Policy. He further submitted that he had not suppressed the material facts, before taking the policy. He further submitted that even no medical evidence or the evidence of the treating Doctor by way of affidavit, was produced to vouchsafe the correctness of the discharge summary Annexure C-7. He  further  submitted  that the District Forum, was, thus, right in holding that the claim of the complainant did not fall within the exclusion Clause 2.1 nor could the same be repudiated, on the ground, that he was suffering from preexisting disease. He further submitted that the District Forum was right in coming to the conclusion that the complainant was entitled to the reimbursement of amount, incurred by him, for his treatment as also the other relief claimed by him. It was further submitted that the District Forum, was right in accepting the complaint, and the impugned order is liable to be upheld.

12.              After giving our thoughtful consideration, to the rival contentions, raised by the Counsel for the parties, we are of the considered opinion, that the appeal is liable to be accepted, for the reasons to be recorded hereinafter. The first question, that arises for consideration, is, as to what was the date of inception of the policy. No doubt the complainant stated that, he started taking the insurance policies, right from 1993-94 either from the OP/appellant or from other Insurance Companies, from time to time, yet, he placed on record only the proposal form Annexure C-1 of the policy for the period from 7.11.2004 to 6.11.2005 and the Good Health insurance policy valid for the period from 9.11.2005 to 08.11.2006, the terms and conditions, whereof are C-11. There was a gap of only three days, in the first policy, which was taken from 7.11.2004 to 6.11.2005, and the second policy dated 9.11.2005, which could be said to be notional. Under these circumstances, for reckoning, as to when the cover incepted for the first time, as mentioned in Clause 2.1 of the terms and conditions C-11 of the policy C-3, date 7.11.2004, is required to be taken into consideration. The cover, thus, incepted for the first time on 7.11.2004, as is evident from C-1. As stated above, there was only notional break of two to three days, in between, which means that the first and the second policy, was in continuation of each other. A similar question arose, before the Hon`ble Supreme Court in United India Insurance Company Limited Vs. Manubhai Dharmasinhbhai Gajera and Others (2008) 10 SCC 404, which was answered, in the following manner:-

“In the present case, CL.4.1. of the policies in question providing that a disease would be considered “pre-existing” and hence excludible only if it were pre-existing when “the cover incepts for the first time”, date of inception for such reckoning to be “the date of inception of the initial mediclaim policy” taken from any Indian Insurance Company, provided the renewals have been continuous and without any break”

13.              The principle of law, laid down, in United India Insurance Company Limited Vs. Manubhai Dharmasinhbhai Gajera and Others case (supra) also supports the conclusion arrived at by us that the cover incepted for the first time on 7.11.2004.

14.      The next question, that arises for consideration, is, as to whether, the complainant suppressed the material facts, which were very well in his knowledge, at the time of submitting the proposal form dated 7.11.2004, annexure C-1 or not. The complainant was put, interalia the following questions, and his answers were recorded as under:-

                                        i.    Are you suffering from mental or psychiatric disease- NO

                                      ii.    Are you suffering from high blood pressure, heart disease including ischemic heart disease -NO

                                    iii.    Are you suffering from any disease of ears or difficulty or interference with hearing etc. - NO

15.              The complainant, as admitted, in his complaint very well knew the fact that he was admitted in Batra Hospital & Medical Research Centre, Department of Cardiology from 06.04.2004 to 09.04.2004. The final diagnosis as per the discharge summary C-7, was as under:-

“DISCHARGE SUMMARY

“Date of Admission – 06.04.2004

Date of Discharge – 09.04.2004

FINAL DIAGNOSIS                       PROCEDURE DONE

Hypertension                                   Coronary Angiography

Dyslipidemia                                    Mild atherosclerotic                                                                 coronary   artery disease.

Mild atherosclerotic coronary   Normal LV Function

artery disease

? TIA (vertebro basilar insufficiency)        Normal renal arteries.

PRESENTATION

This 60 years old gentleman is a hypertensive, non diabetic and exsmoker. He is having dyspnoea on exertion class II from 4 months. Echo showed enlarged LV and LA, mold MR, LVEF 40%. He was admitted for evaluation and management.

EXAMINATION ON ADMISSION

Pulse Rate – 72/min. regular

BP-130/90 mmHg                                    CVS-S1 & S2 Normal

Chest-Bilateral clear                                CNS & P/A-NAD

HOSPITAL COURSE

Coronary angiography was done which revealed mild atherosclerotic disease, normal LV function and normal renal arteries. Echocardiography revealed aortic root dilatation and on TEE there was no intimal. He complained of transient giddiness and was evaluated by Neurologist (Dr. Rajesh Garg) MRI done, showed chronic launar infarct, carotid Doppler showed LICA 30%, RCCA-34%, LCCA-39%, right oclavian proximal 52%. He is advised conservative management. He is being discharged in a stable condition”

16.              Similarly, the discharge summary Annexure C-4 of the complainant, issued by the Fortis hospital, where he remained admitted from 29.08.2006 to 05.09.2006 reads as under:-

“DISCHARGE SUMMARY

Date of Admission – 29.08.2006

Date of Discharge – 05.09.2006

FINAL DIAGNOSIS PROCEDURE DONE

PRESENTATION

Dr. P.K. Aggarwal, 67 years, is an ex-smoker, hypertensive, nondiabetic, dyslipidaemic with no family history of coronary artery disease. He presented with complaints of dyspnoea on exertion class II-III, since one month with postural giddiness while standing. No history of chest pain/palpitation. He underwent coronary & carotid angiography in 2004 which showed mild coronary artery disease, normal IV function, LICA 30%, RECA-34%, LCCA-39%, right subclavian proximal 52%.  He was admitted for evaluation & management.

EXAMINATION ON ADMISSION

Pulse Rate – 96/min. regular

BP-140/80 mmHg(Supine)-130/80 mmHg (Standing)

Chest-Bilateral vesicular breathing                        

CVS-S1 (valuable) S21

Abd.Soft, no organomegaly

HOSPITAL COURSE

Coronary angiography was done which revealed mild coronary artery disease, normal renal arteries, dilated aortic root with mild AR. Holter evaluation revealed atrial librillation with >3 see pause. He underwent permament pacemaker implantation (VVIR) through right subclavian route. He was evaluated by Dr. R.K. Mani for dyspnoea and found to have resturctive physiology on PFT. He had been advised sleep study later on. Post procedure hospital stay was uneventful. He is being discharged in stable state”

17.              In discharge summary C-4 of the Fortis hospital, where the complainant remained admitted it was in clear-cut terms, recorded that he (complainant) underwent coronary & carotid angiography in 2004 which showed mild coronary artery disease. It means that in 2004, when the cover incepted for the first time on 7.11.2004, the complainant was suffering from mild coronary artery disease. When a particular fact, which is very material was in the knowledge of the complainant, and he concealed the same, then it could be said to be suppression of material fact going to the root of the case. From the aforesaid documents, it was proved that the complainant was suffering from coronary artery disease, which was preexisting, when the cover incepted for the first time on 7.11.2004. His case fell within the exclusion Clause 2.1 of the terms and conditions C-11 of the policy C-3, which are reproduced as under:-

“2. EXCLUSIONS

2.1      The Company shall not be liable to make any

payment under this policy in respect of any expenses, whatsoever, incurred, by any Insured Person in connection with or in respect of.

2.1.1               Diseases/injuries which are preexisting when the cover incepts for the first time. This exclusion will be deleted after four consecutive claim free policy years. This condition 2.1.1 shall not, however, apply in case of the insured person having been covered  under  Individual  Mediclaim    Policy or Group Mediclaim Insurance Policy with Oriental Insurance Company for a continuous period of immediately preceding 48 months without any break.

NOTE: This exclusion 2.1.1. shall not however apply if,

In the opinion of a Panel of Medical Practitioners constituted by the Company for the purpose, the Insured Person could not have known of the existence of the disease or any symptoms or complaints thereof at the time of making the proposal for insurance to the company.”

18.              The District Forum was thus, wrong in coming to the conclusion, that the claim of the complainant, was arbitrarily repudiated by the OP, as it was not proved that he was suffering from any preexisting disease. The findings of the District Forum in this regard, being illegal, are liable to be reversed.

19.              It has been repeatedly held that the contract of insurance falls, in the category of contract of UBERRIMAE FIDEI meaning thereby a contract of utmost good faith, between the parties. When information on a specific aspect, is asked for, in the proposal form, the insured is under a solemn obligation, to make a true and full disclosure of the information, on the subject, which is within his knowledge. Of course, obligation to disclose, extends only to the facts, which are known to the applicant, and not to what he ought to have known. The Hon`ble Supreme Court of India in United Insurance Co. Ltd. Vs. M.K.J. Corporation, III (1996) CPJ 8 (SC)= (1996) 6 SCC 428, laid down the principle of law, that it is a fundamental principle of Insurance Law that utmost faith must be observed by the contracting parties. Good faith forbids either party from non-disclosure of the facts, which the party privately knows, to draw the other into a bargain, from his ignorance of that fact and his believing to the contrary. To the similar effect, the principle of law, was laid down in Modern Insulators Ltd. Vs. Oriental Insurance Co. Ltd.,  II (2000) SLT 323 = I (2000) CPJ 1 (SC)=(2000) 2 SCC 734. In C.A.No.5322 of 2007, P.C. Chakko & Anr. Vs. Chairman, L.I.C. & Others, IX (2007) S.L.T. 533 = IV (2007) ACC 773 (SC) = VII(2007) CLT 229 (SC), the Apex Court  observed in Para 16 as under:-

“the purpose of taking policy of insurance is not, in our opinion, very material.  It may serve the purpose of social security but then the same should not be obtained with a fraudulent act by the insured.  Proposal can be repudiated if a fraudulent act is discovered.  The proposer must show that his intention was bonafide.  It must appear from the face of the record.  In a case of this nature, it was not necessary for the insurer to establish that the suppression was fraudulently made by the policy holder or that he must have been aware at the time of making the statement that the same was false or that the fact was suppressed which was material to disclose.  A deliberate wrong answer which has a bearing, on the contract of Insurance, if discovered may lead to the policy being vitiated in law.”

20.               Thus, the policy stood vitiated, on account of the reason that the insured suppressed the material facts regarding his preexisting heart disease, when the cover incepted for the first time in 2004.

21.              The next question, that arises for consideration, is as, to whether, it was necessary to produce the affidavit of treating Dr. N.P. Singh. In Puspha Chauhan Vs. Life Insurance Corporation of India, II (2011) CPJ 44 (NC), the point which fell for determination before the National Commission was whether reliance could be placed on the certificate issued by Dr. N.Jain, which was not duly submitted alongwith his affidavit. In that case, the certificate (annexure D-2) placed on record indicated in Column No.1 that the primary cause of death of the insured was recurrent pyogenic meningitis, whereas, the secondary cause was stated as CSF Rhinonhoes. It was recorded, in the said certificate, that the history was given to him, by the wife, and attendant of the insured, and that the insured had been suffering from the said disease, for the last thirty years, for which he was taking treatment from Safdarjung Hospital, New Delhi. The National Commission held that since there was suppression of material facts, by the insured, at the time, when the cover incepted for the first time, repudiation of his claim, was valid. The Apex Court, while considering a similar situation, where the Doctor had not filed the affidavit, in respect of the certificate issued by him in Satwant Kaur Sandhu Vs. New India Assurance Company Ltd.,  IV (2009) CPJ 8 (SC), in para  22, held as under:-

“Answers given by the proposer to the two questions were “Sound Health” and “Nil” respectively. It would be beyond anybody’s comprehension that the insured was not aware of the state of his health and the fact that he was suffering from diabetes as also chronic renal failure, more so, when he was stated to be on regular haemodialysis. There can hardly be any scope for doubt that the information required in the afore-extracted questions was on material facts and answers given to those questions, were definitely factors, which would have influenced and guided the respondent - Insurance Company to enter into the Contract of Mediclaim Insurance with the insured. It is also pertinent to note that,  in the claim form, the appellant had stated that the deceased was suffering from Chronic Renal Failure and Diabetic Nephropathy from 1st June, 1990, i.e. within three weeks of taking the policy. Judged from any angle, we have no hesitation in coming to the conclusion that the statement made by the insured in the proposal form as to the state of his health was palpably untrue to his knowledge. There was clear suppression of material facts in regard to the health of the insured and, therefore, the respondent - insurer was fully justified in repudiating the insurance contract. We do not find any substance in the contention of learned Counsel for the appellant that reliance could not be placed on the certificate obtained by the respondent from the hospital, where the insured was treated. Apart from the fact that at no stage the appellant had pleaded that the insured was not treated at Vijaya Health Centre at Chennai, where he ultimately died. It is more than clear from the said certificate that information about the medical history of the deceased must have been supplied by his family members, at the time of admission, in the hospital, a normal practice in any hospital. Significantly, even the declaration in the proposal form by the proposer authorises the insurer to seek information from any hospital he had attended or may attend concerning any disease or illness which may affect his health”.

22.              In the aforesaid case, the Supreme Court, without insisting on the necessity of affidavit of the Doctor, who issued the certificate, relying on the same (certificate) held that the insured was guilty of suppression of facts i.e. the disease from which he was suffering and his claim was rightly repudiated. The principle of law, laid down, in the aforesaid cases, is fully applicable, to the facts of the instant case. As stated above, it was admitted by the complainant, in his complaint, that he was admitted in Batra Hospital on 06.04.2004 and was discharged therefrom on 09.04.2004. The discharge summary C-7 clearly mentioned as to with which disease he was suffering and which procedure he underwent. Similarly, in the discharge summary Annexure C-4, issued by the Fortis Hospital, where the complainant remained admitted, from 29.08.2006 to 05.09.2006, it was, in clear-cut, terms stated that he was suffering from mild coronary disease. It clearly shows that the complainant had intentionally and deliberately suppressed the material fact, of his preexisting disease, while submitting the proposal form on 7.11.2004, which vitiated the contract itself. The District Forum was wrong, in coming to the conclusion, that in the absence of an affidavit of Dr. N.P. Singh, his certificate R-4 and both the discharge summaries Annexure C-4 and C-7 could not be taken into consideration, for coming to the conclusion, that the complainant was suffering from any preexisting disease. In view of the principle  of law laid down in Satwant Kaur Sandhu`s case (supra), decided by the Apex Court, the principle of law, laid down, in New India Assurance Co. Ltd. Vs. Arun Krishan Puri reported in III(2009) CPJ-6 (NC) relied upon by the District  Forum shall not hold the field. The findings of the District Forum in this regard being not based on the correct appreciation of the evidence and law, on the point, are liable to be reversed.

23.              In view of the above discussion, it is held that the order of the District Forum is illegal and perverse, warranting the interference of this Commission.

24.              For the reasons, recorded above, the appeal is accepted with costs of Rs.3,000/-. The order of the District Forum, is set aside and the complaint stands dismissed.

25.              Copies of this order be sent to the parties free of charge.

Pronounced.

12^th May, 2011

Sd/-

[JUSTICE SHAM SUNDER]

PRESIDENT

Sd/-

[NEENA SANDHU]

MEMBER

Rg