Date of filing:30.11.2022

                                                                                                Date of Disposal:12.11.2024

BEFORE THE KARNATAKA STATE CONSUMR DISPUTES REDRESSAL COMMISSION, BENGALURU (PRINCIPAL BENCH)

DATED:12^th DAY OF NOVEMBER 2024

PRESENT

Mr. K. B. SANGANNANAVAR: Pri. Dist. & Session Judge (R)- JUDICIAL MEMBER:

Mrs.M.DIVYASHREE : LADY MEMBER

APPEAL NO.2337/2022

O R D E R

BY Mr. K. B. SANGANNANAVAR: Pri. Dist. & Session Judge (R)- JUDICIAL MEMBER:

1. This is an appeal filed by OP in CC/377/2014 on the file of III Additional DCDRC, Bengaluru, aggrieved by the order dated 26.08.2022. 

(The parties to this appeal will be referred as to their rank assigned to them by the District Commission)

2. The Commission examined grounds of appeal, impugned order, appeal papers and heard learned counsels.

3. Now the point that arise for consideration of the Commission would be:

Whether impugned order dated 26.08.2022 passed in CC/377/2014 does call for an interference of the Commission for the grounds set out in the appeal memo?

4. At the very outset, we have to make mention of the fact found from appeal papers, that the dispute between the parties came to be decided on 06.06.2016 by District Commission, dismissing the complaint with no order as to costs and the aggrieved complainant  had preferred an appeal in A/1561/2016, wherein the State Commission on 06.09.2019, allowed the appeal and as a result set aside the order dated 06.06.2016, by giving direction to District Commission to re-consider the case afresh by re-examining the point on non-disclosure of health issue and repudiation of the claim by the Ops, affording opportunity to both parties.  After reminding of the matter the DCDRC, readmitted the case and after re-examining of the materials proceed to allowed the complaint in part and directed OPs to pay Rs.5,123/- along with interest @ 09% p.a. from 24.11.2012 till realization and awarded Rs.10,000/- towards mental agony and Rs.10,000/- towards cost of litigation within 30 days failing which such amount shall carry interest @ 09% p.a. from the date of order till realization.  It is this order is assailed in this appeal by OPs contending that District Commission misconstrued the claim form lodged towards reimbursement of medical expenses.  The documents on record did not disclose that complainant No.1 had informed about her previous treatment in 2008 at the proposal stage of the policy itself.  The Discharge summary relating to hospitalization of complainant No.1 in the proposal form dated 31.10.2011 do not clearly indicate that complainant No.1 had sustained injuries in respect of RTA occurred on 07.05.2008 and was treated at Apollo Hospital, Hyderabad on 03.04.2013 was towards removal of screws and bone grafting.  The complainant has misrepresented and concealed material information as to her previous taking treatment in Apollo Hospital at Hyderabad, was not properly appreciated by the District Commission and the District Commission had failed to consider several issues raised in their written version.  The impugned order is contrary to the facts and law is liable to be set aside.

5. Complainant Nos.1 and 2 are wife and husband, while complainant No.3 is their son.  Complainant Nos.1 and 2 have presented themselves as advocates by profession.  In their complaint they have stated in para-03 about payment of premium amount of Rs.5,123/- per year and they have paid such premium since 2010, while such policy was in force, complainant No.1 had undergone nail removing and bone grafting operation in the month of April 2013, which was informed to the OP through their claim petition along with discharge summary and medical records for payment.  It is not in dispute that the policy is issued by OP as per Annexure-A6 under Family Health Protector on 29.05.2013 and 04.06.2013 OP issued a letter stating that policy of the complainant No.1 stands cancelled and they are unable to offer any refund of premium amount. The OP now demanding premium of Rs.6,363/- for only 02 members namely complainant Nos.2 and 3 which according to complainants is arbitrary and in such circumstances, sought for a direction against OP to rectify  the mistake, cancelling complainants policy and refund the entire premium amount paid by them along with interest @ 26% p.a. and have sought compensation amount of Rs.1,00,000/- towards physical pain and mental agony suffered by them.

6. It is not in dispute Family Health Protector under quality health insurance issued by OP is valid from 24.11.2010 and the discharge summary issued by Manipal Hospital discloses Mrs.Girija Patil, namely the complainant No.1 was admitted on 21.03.2013 was discharged on 03.04.2013 wherein finally diagnosed with:

1. United Fracture Left Proximal Femur With Implants in Situ
2. Non Union Left Humerus with IL Nail in Situ
3. United Fracture Right Humerus with Implant in Situ. 

The procedure done in the said hospital was

1. Removal of DHS and Cancellous Screws Left Hip
2. Bone Grafting Left Humerus
3. Removal of Screws Right Humerus Done on 01.04.2013 under G.A. 

In this discharge summary would see History of Presenting Illness.  Patient a k/c/o united fracture left hip with DHS implant in Situ.  United fracture right Humeus with I/L nail in situ and non-union fracture left Humerus I/L nail in situ.  Operated 04 years back.  Now admitted for surgical management of the same. 

From the above document treatment goes back to 2009 and the policy is valid from 24.11.2010.  Learned counsel for appellant/OP submits Health Insurance Claim Form submitted by complainants is considered by the District Commission as if it was a proposal form, since in para-13 District Commission mistook claim form as proposal form.  This claim form is dated 27.04.2013 and in this claim form also could see complainant No.1 operated 04 years ago.  This was filled by attending physician of Manipal North Side Hospital, was considered as proposal form forming an opinion complainants have disclosed complainant No.1 taking treatment during 2008.  It is shown from this document that during 2008 implants were put and the claim in question is in respect of removal of implants during the period of hospitalization from 31.03.2013 till 03.04.2013.

7. On the contrary learned counsel for complainant submits that before cancellation of policy no notice given and in such circumstances, OP insurer is bound to refund of premium amount,  but facts remain found from Annexure-A8 dated 29.05.2013 after receipt of claim documents lodged under subject policy in respect of complainant No.1 informed -

Company shall not be liable under this Policy for any claim in connection with or in respect of:

Any condition, ailment or injury or related condition(s) for which you had signs or symptoms, and / or were diagnosed, and / or received medical advice/treatment, within 48 months prior to your first policy with us would not be payable until 48 months of continuous coverage have elapsed, since inception of the policy with us.

“Pre-Existing Condition means any condition, ailment or injury or related condition(s) for which you had signs or symptoms and/or were diagnosed and/or received medical advice/treatment, within 48 months prior to your policy with us.”

8. Thus by mentioning terms of the policy obtained by complainant No.1 bearing No.HMA0015889000100 gave notice. The Hospitalization of the old fracture and the related surgery were not declared at the time of taking policy.  This tantamount to suppression of material facts under the policy, thereby invoking below policy clause for cancellation of the policy.  Hence the policy stands cancelled for the insured, Mrs.Girija Patil as per captioned clause. Thus from this notice, in so far as the policy issued in the name of complainant No.1 came to be cancelled.  In our view   facts remain, Mr.Ravindra Reddy/complainant No.2 and her son Mr.Siddarth Reddy/complainant No.3 were also parties to the complainant as complainant No.2 and 3 have also obtained policy with their membership No.HM121727715A with policy No.HMA0015889 and with membership No.HM121727715C with policy No.HMA0015889, which was not at all considered by District Commission, since complainant in their complaint have sought for refund of the entire premium amount paid by them.  In our view, OP insurer could have refunded the premium amount paid by complainant No.2 and 3 on the principals of pro-rata basis which was not considered by the District Commission. In our view  even if we justify the repudiation of the insurance claim  in so far as  complainant No.1 on the ground that insured was not declared at the time of taking policy in respect of the history of the bone fracture and the related surgery which amounts to suppression of material facts under the policy considering Annexure-A8 as noticed to cancel the policy,  we are of the view that such policy issued in favour of complainant No.2 and 3 cannot be cancelled and such policy  cannot be held void and the insurer cannot forfeit the premium paid as a whole. Let us give an example to form such an opinion to clarify ourselves if  Complainant No.1 to 3 having been obtained policy Family Health Protector, of whom, if Mr.Ravindra Reddy and their Son Mr.Siddarth Reddy could have made claim seeking re-imbursement of their treatment, cancellation of policy issued by them could not have been arisen. It is therefore we are of the view that the OP is liable to return the premium amount pro-rata. If complainant No.1 Mr.Girija Patil was admitted for taking some other treatment say for example not in relation to removal of implants question of cancellation of the policy and forfeiture of the premium amount would not have been arisen. Thus, considering the Family Health Protector, consisting of Mr.Ravindra Reddy, his wife and their son, since policy issued w.e.f. 24.11.2010 and consecutively for the successive 03 years till 04.06.2013, they   have paid premium amount, has to be held rightly directed to refund amount but not as per pro-rata which has to be modified.

9. The District Commission while passing the impugned order directed OP to refund Rs.5,123/-. In our view it should have been Rs.10,246/- and to that effect impugned order needs modification.

10. Learned counsel for complainant placed reliance reported in IV (2017) CPJ 374 (NC) in the case between Nitaben Bhikhalal Bamb and others v. Oriental Insurance Co. Ltd. and another wherein held at Para-04 –

“Thus, the short question for consideration is whether or not the notice stated to have been issued by the Insurance Company to Prime, ostensibly refunding the premium to the Prime, was sufficient compliance of the afore-stated condition stipulated in the afore-extracted Condition No.5.”

Para-05 –

“Having carefully perused the details mentioned on the certificate of insurance issued by the Insurance Co., we have no hesitation in coming to the conclusion that the ‘insured’ as recorded in the certificate was late Shri.Bhikhalal Rakhavbhai Bamb and complainant No.1, as his wife, was the nominee.Even the communication dated 04.11.1998 addressed by the Insurance Company to Prime lends support to our view to the effect that, for all intents and purposes, late Shri.Bhikhalal Rakhavbhai Bamb was the ‘insured’ within the meaning of the said condition in the insurance contract and by any stretch of imagination Prime could not be said to be the ‘insured’, as is sought to be pleaded by learned counsel appearing for the Insurance Co.Hence, in our opinion, the cancellation of the policy, without notice and refund of premium (pro-rata) to late Shri Bhikhalal Rakhavbhai Bamb, who was undoubtedly the ‘insured’, amounts to deficiency in service on the part of Insurance Company, in repudiating the claim preferred by the complainants under the afore-noted policy, on the afore-noted ground.”

Learned counsel for complainants would submit policy issued not in the name of Mrs.Girija Patil but in the name of Mr.Ravindra Reddy to whom no notice is issued, as such Mrs.Girija Patil/complainant No.1 could not be said to be the insured alone, has some legal substance considering the ratio laid down by the Hon'ble NCDRC in the decision cited supra.

11. Learned counsel placed III (2017) CPJ 553 (NC) in the case between Arun Kumar v. New India Assurance Co. Ltd. and another wherein held in para-10 –

“From the above version, it is made out that the opinion given by the panel doctors is based on presumption only that the complainant would have been suffering from degenerative joint disease for the last 4 to 5 years atleast.The said presumption has not been supported by any medical evidence or record, which may indicate that the complainant withheld any material fact about his health condition from the knowledge of the insurance company, while making application for getting the policy.It is not denied that the complainant has been taking the insurance policy since the year 1997.It was the bound duty of the Insurance Co. to have verified the information given in the proposal form by obtaining suitable expert opinion.In case certain columns in the proposal form were left blank, it was obligatory on the Insurance Co. to ask him to fill the required information, before taking decision to issue the insurance policy.It is a matter of grave concern that the insurance companies, whether in the public sector or the private sector, do not make any effort to examine the proposal properly or get the necessary verification done, at the time of issuing the policies in question.However, when the claims are filed, minute scrutiny starts at that stage and the claims are repudiated, even for minor lapses on the part of the proposer.In the present case, the discharge summary of Sitaram Bhartiya Hospital stated that the complainant had difficulty in walking for a long time and history of borderline hyper tension, but not on any medication.The District Forum had rightly observed that non-disclosure of such conditions in the proposal form cannot be blown out of proportion, so as to disentitle the complainant from the claim amount from the Insurance Company.We have no reasons to differ with the conclusion arrived at by the State Commission, because the conditions so mentioned in the report of the hospital, do not imply that the complainant was suffering from any serious disease.It is held, therefore, that the claim has been wrongly repudiated by the Insurance Company on the ground of non-disclosure of information about the health conditions in the proposal form.”

12. Further in II (2017) CPJ 19A (CN) (Punjab) in the case between India First Life Insurance Co. Ltd. v. Sudesh Rani wherein held –

“Insurance Companies are in haste to charge premium, but when time to pay insurance claim comes, they generally take up one excuse or other to avoid their liability – Repudiation not justified.”

13. In view of the above discussions and followed by the principles enunciated in the decision cited supra, District Commission has to be held justified in giving direction to OP insurer to refund the premium amount paid by complainants.  When OP has failed to reimburse Rs.67,495/- claimed under claim form for the treatment taken in Manipal Hospital as an inpatient from 31.03.2013 to 03.04.2013 for removal of implants which were put 04 years ago.  Hence, in such conclusion, we did not find any grounds interfere in the impugned order in so far as recording  finding on point No.1, however, giving direction against OP/insurer only to refund Rs.5,123/- has to be modified and in consideration of peculiar facts and circumstances, awarding compensation towards mental agony and cost of litigation, considering the facts, required to be reduced and  proceed to allow the appeal in part in the following terms:

The Complaint filed by complainant Nos.1 to 3 is allowed in part and directed OP to refund Rs.10,246/- along with interest @ 06% p.a. from the date of receipts till realization and do pay Rs.10,000/- towards mental agony and Rs.5,000/- towards litigation costs within 60 days failing which such amount shall carry interest @ 06% p.a. from such default till realization.

14. The Amount in deposit is directed to be transferred to District Commission for needful.

15. Send a copy of this Order to the District Commission and parties to the appeal for information.

        Lady Member                                  Judicial Member             

*GGH*