1.       This revision has been filed under Section 21(b) of The Consumer Protection Act, 1986 in challenge to the Order dated 02.09.2014 of The State Consumer Disputes Redressal Commission in appeal no. 317 of 2012 arising out of the Order dated 08.02.2012 of The District Consumer Disputes Redressal Commission in complaint no. 77 of 2011.

2.       We have heard the learned counsel for the petitioner insurance co. and the learned counsel for the respondent complainant and have perused the available material. We may mention here that vide this Commission’s Order dated 19.05.2016 the records of the two fora below were summoned and the file of the insurance co. pertaining to processing of the insurance proposal in question was also ordered to be produced.

3.       The dispute relates to repudiation of an insurance claim.

The chronology leading to this revision is that Jagtar Singh, father of the complainant, had taken an insurance policy on 06.10.2010 for sum insured of Rs. 13.28 lakh. The premium was paid. The policy was valid. Jagtar Singh died on 05.11.2010 in hospital due to accidental burn injuries. The complainant was the nominee in the policy. The insurance co. repudiated his claim vide its letter dated 18.02.2011, citing that:

“- - - we received a medical evidence from Guru Gobind Singh Medical College Hospital, dated 14^th Oct 2010, which states that Late Mr. Jagtar Singh was a known Psychiatric patient and was under treatment for the same. As per our records, medical as per MetLife requirement was conducted on 28^th Oct 2010, however, as per FIR and other related documents, it is evident that the Fire accident occurred on 14^th Oct 2010. However, the concerned question in the application form dated 06^th Oct 2010, seeking insurance cover under this policy was answered as “No” by Late Mr. Jagtar Singh.- - -.”

The complainant requested for re-consideration of the decision. The insurance co. informed him vide letter dated 17.03.2011 that its claims committee has decided to uphold the decision to repudiate the claim, giving reasons that:

Your appeal was reviewed by the Claims Committee independently. They examined all the facts and circumstances of the case and documents on record.

            Remarks of the Committee:

            1.         The observations made by the Claims department during the assessment of the claim were appropriate

2.         Medical records from Guru Gobind Singh Medical College Hospital, dated 14^th Oct 2010, prove that Late Mr. Jagtar Singh was known “Psychiatric Patient” and was under treatment for the same.

3.         Also, it was evident from post mortem report that Late Mr. Jagtar Singh was met with Fire accident on 14^th Oct 2010 and was hospitalized for the treatment of the same from 14^th Oct 2010 to 5^th Nov 2010. As per our records the medical test for risk cover under MetLife Insurance plan, was appeared to have been undergone on 28^th Oct 2010. As Late Mr. Jagtar Singh was already under treatment for fire accident on that day, it was evident that he did not attend to medical test for issuance of MetLife Policy.

In light of above mentioned evidences, and after applying the principles of equity, justice and good conscience, in line with the provisions laid down under the Insurance Act, 1938, as upheld by various Courts in their judicial pronouncements, the Claims Committee has decided to uphold the decision to repudiate the claim.

The complainant filed a complaint with the District Commission on 28.03.2011. The District Commission vide its Order dated 08.02.2012 dismissed the complaint. The complainant appealed before the State Commission. The State Commission vide its Order dated 02.09.2014 accepted the appeal and set aside the Order of the District Commission. It ordered the insurance company to pay (i) Rs. 13.28 lakh alongwith interest at the rate of 9% p.a. from the date of filing of the complaint till realisation (ii) Rs. 50,000/- as compensation and (iii) Rs. 11,000/- as litigation expenses.

4.       We note that in its appraisal the State Commission has aptly dealt with the fundamental issues germane to the dispute. For ready reference relevant extracts of the State Commission’s appraisal are reproduced below:

9.         In case we go through the pleadings, evidence and documents on the record, the policy stands admitted by the Ops in favour of the DLA Jagtar Singh.

10.       Now the two questions arises out of the objections taken by the Ops on the grounds the claim of the complainant has been repudiated, the first grounds in concealment of the pre-existing disease i.e. psychiatric disorder in the DLA and secondly, mis-representation by taking the medical certificate from Dr. S. P. Garg?

11.       So far as the pre-existing disease i.e. psychiatric disorder in the DLA, certainly, at the time of taking the proposal form, it was not mentioned in that. We have to see what is the evidence with the Ops to prove that before taking the policy, the DLA was suffering from any mental disorder. The Ops have mainly relied upon the Bed Head Ticket of Guru Gobind Singh Medical College Hospital, Faridkot Ex. R-16 and in that Bed Head Ticket in the main history it has been mentioned that the patient is a psychiatric patient getting the treatment from Dr. Jaswant (Faridkot) but there is no document on the record vide which any treatment was taken by the DLA from the concerned Dr. Jaswant. In the pleadings the complainant has specifically denied that the DLA had not taken any treatment of psychiatric disorder from any Doctor. In that event it was incumbent upon the Ops either to get record of Dr. Jaswant or file an affidavit of Dr. Jaswant alongwith documentary proof that before taking the policy, the DLA had been taken the treatment of his psychiatric disorder from Dr. Jaswant. Mere reference in the history is not sufficient to say that the DLA was suffering from any psychiatric disorder till any specific evidence comes on the record, therefore, we do not agree with the preposition raised by the counsel for the Ops that before taking the policy, the DLA was suffering from psychiatric disorder, which was concealed by him at the time of taking the policy.

12.       Further the cause of death in this case is burn injuries and not psychiatric disorder. In case the fire had caught to the clothes of the DLA and later on it affected the body parts of the DLA, it does not mean that he was suffering from any psychiatric disorder. The fire had caught to the clothes of the DLA, there can be number of reasons and once the fire had caught to the clothes of the DLA, sometime immediate intervention may not be there from the family members or the neighbourers or in the meantime, there may be serious burn injuries to the DLA, which ultimately proved to be fatal, therefore, psychiatric disorder is not a cause of death, therefore, again it will not be material point to the Ops to repudiate the claim of the complainant on that ground.

13.       Now what is the effect of medical certificate issued by Dr. S. P. Garg in the name of Jagtar Singh. In the grounds of appeal, he has stated by the complainant that Jagtar Singh was admitted with burn injuries in GGS Medical College & Hospital, Faridkot and the injuries were fatal, therefore, it was not possible for him to go to the hospital or Dr. S. P. Garg and moreover, in the Bed Head Ticket, there is no entry that on 28.10.2010, the patient was discharged from the hospital to be examined by Dr. S. P. Garg and even the case of the Ops is also that this medical certificate was taken by way of impersonation. Even the signatures on the certificate and signature of Jaswant Singh on the proposal form and medical certificate are quite different. In case this certificate was produced by way of impersonation then we have to see, who submitted this medical certificate to the Ops. There is no letter on behalf of the complainant vide which he had submitted his medical certificate to the Ops. Therefore, it was for the Ops to explain how this certificate came in there hands. In that event, the examination of Dr. S. P. Garg was very important but the Ops did not examine Dr. S. P. Garg rather vide statement dated 4.1.2012, it was given up as unnecessary witness although the Doctor was called for to be examined, therefore, it was for the ops under what circumstances, they had not examined Dr. S. P. Garg, therefore,, in case the Ops have not been able to prove on the record how and under what circumstances this certificate had reached to their office then the DLA or complainant not to blame for this certificate by way of mis-representation and the other witness examined by the Ops is Mr. Anil P.M., Deputy Director, Legal and Constituted Attorney of the Ops. He in his affidavit has stated that the contents of the accompanying written statement are true and correct to the best of his knowledge, derived from the record available in the case. In fact it is not an affidavit in the form of affidavit but affidavit to verify the contents of the written statement. In the written statement filed by the Ops, they are silent, how this certificate was received by him. Therefore, in case the Ops have placed on the record one certificate dated 28.10.2010 without explaining how this certificate was received by him; the complainant or DLA was not to be blamed for that, therefore, the claim of the complainant could not be rejected on that ground. In case this medical certificate is excluded from the record, the Ops have not been able to prove on the record whether before taking the policy, the DLA was suffering from any disease, which was concealed by him as they had not brought any evidence on the record to prove this fact. Therefore, the repudiation of the claim of the complainant on the ground of pre-existing disease and false certificate is incorrect in view of the reasons stated above. In these circumstances, the findings of the learned District Forum are liable to be set-aside.

5.       The substance of the State Commission’s appraisal is that sufficient evidence to prove the insurance co.’s insinuating assertion about the deceased insured having been a “known psychiatric patient” was not forthcoming i.e. the insurance co. had simply failed to discharge its onus of proving that in fact the deceased insured was a “known psychiatric patient”. It has accordingly held that the repudiation of the claim on ground of concealment of pre-existing disease was incorrect. The State Commission has also made an observation that the cause of death was burn injuries and not psychiatric disorder, if the fire had accidently caught the clothes of the deceased insured and later on affected his body it does not mean or imply that he was suffering from any psychiatric disorder.

6.       Learned counsel for the complainant argues that not only was evidence to support the insurance co.’s assertion that the deceased insured was a “known psychiatric patient” not at all forthcoming, but also that the insurance co.’s own investigator had himself made inquiry and vide his report dated 24.01.2011 had informed the insurance co. that the deceased insured “was always seen in good health and never suffered from any chronic disease”. Learned counsel draws attention to the following extract from the investigator’s report:

“As per inquiries made from the villagers, L/A was always seen in good health and never suffered from any chronic disease. However, as per villagers and family members, he was a habitual Bidi smoker consuming about 20-30 bidis per day. On 14-10-10, some plaster work was going on in his house and L/A after taking lunch lay down on a cot in verandah and as per habit was smoking bidi. While smoking, he might have slept and his clothes beard etc. got fire from burning bidi. The mason Mr. Gurpreet Singh working at that time in the house saw smoke and informed family members who without losing any time rushed him to Guru Gobind Singh Medical Hospital, Faridkot where he was admitted the same day for treatment, but expired during treatment on 05-11-10 due to burn injuries. As the death was due to burns, police action was also done and Post mortem was also conducted. Copies of police report, Panchnama and post mortem report are enclosed herewith. Medical college, when contacted, to provide copies of treatment details, told that this being a case where police report and post mortem report is also involved, they don’t give copy of any case file. However they will fill up the Insurance Company’s form on a written communication from the company. As such please write suitably to Medical Supdt., Guru Gobind Singh Medical College and Hospital, Faridkot to fill up the medical attendant’s form with complete history and return the same to the company. I contacted the police official at police station, Kotakpura to provide copy of final police report, but he told that since no was involved in the death and no foul play is there, no FIR was lodged. As such there is no final report in this case. It was entered in daily diary of the police only, copy of which is enclosed. - - -”.

According to the learned counsel even a fleeting glance on the contents of the investigator’s report would give a complete rebuff to the allegations that the deceased insured was afflicted with any psychiatric disorder. 

Learned counsel further buttresses his argument by submitting that psychiatry is the branch of medicine concerned with the study and treatment of mental illness, emotional disturbance, and abnormal behaviour. To say in vague generalized terms in an omnibus manner that a person is a “known psychiatric patient” was improper on the part of the insurance co., had there been any truth in it the insurance co. should have specified which specific psychiatric disorder per se the deceased insured was suffering from. The submission is that even though no evidence was forthcoming to prove that the deceased insured was a “known psychiatric patient” and any such finding or fact is conspicuous by its absence in the insurance co.’s own investigator’s report, but for the sake of discussion alone if at all a psychiatric disorder was to be alleged by the insurance co. the specific psychiatric disorder should have been specifically stated rather than slapping a vague generalized allegation of “known psychiatric patient”.

Learned counsel further submits that in the normal wont the insurance co. was procedurally required to conduct its internal medical examination of the deceased insured at the time of issuing the policy. As per its own record its medical examination was conducted on 28.10.2010. However the deceased insured suffered burn injuries on 14.10.2010 and was in hospital till his demise on 05.11.2010. Therefore it was not feasible for the deceased insured to have undertaken the insurance co.’s medical examination on 28.10.2010. That being so, it is demonstrable as such that the medical examination purportedly conducted by the insurance co. was fabricated and fudged by the insurance co. in unholy haste and zeal to complete its business. Learned counsel draws attention to the internal notings and communications of the insurance co. to show that it was fully aware that its medical examination was manipulated and yet it dexterously shifted the onus of its own fudging on the deceased insured and repudiated the claim. In this respect, he especially draws attention to the following internal communications of the insurance co.:

16-Mar-2011 12:04 PM

Your mail statements are contradictory. Please check and send the right version. You say the medicals were done with us and again you say that insured has not attended medical examination conducted by us. Which is right????

Regards

Sankaran PS

Director-Compliance & Internal Control

            Metlife India Insurnace Company Ltd.

16-Mar-2011 12:14 PM

            Dear Sir

            I meant to say that insured was hospitalized from 14october2010 (date of policy issuance and date of fire accident) till his date of death (05nov2010). Medicals were conducted by us on 28 October 2010. Therefore, we can consider that insured has not attended the medicals conducted by us (somebody else might have represented him for medicals) as it is not possible for the hospitalized insured to attend medicals.

Regards

Madhavi Shrine

Deputy Manager

Claims Department

16-Mar-2011 12:31 PM

            Hi Bala

            Please call me… This leads to a different situation where the medicals done is a fraud and needs to be investigated? Madhavi should raise a question as to how medicals could have happened while the Pl met with a fire accident and in the hospital.. instead she is writing differently. Where is the question of considering.. it is evident that it is a fraudulent medical report.

            Regards

            Sankaran PS

            Director-Compliance & Internal Control

            Metlife India Insurnace Company Ltd.

7.       After having noted to our disconcert the internal communications reproduced hereinabove, on a query raised by the bench learned counsel for the insurance co. submits that he is not aware whether an internal inquiry was ever conducted to ascertain the facts and to fix responsibility apropos the cooked-up medical examination of the insurance co.

Learned counsel could also not elaborate on the specific psychiatric disorder the deceased insured was allegedly suffering from (as for example schizophrenia or manic depressive disorder etc.).

8.       The following is clearly borne out from the material available before us:

(i)      The deceased insured had taken a policy, he had paid the premium, the policy was valid (these facts are not in dispute).

(ii)      As borne out from the general diary entry with the police, the medical record and post mortem report of the hospital and the insurance co.’s investigator’s report, the deceased insured got accidental burn injuries and died as a consequence thereof while under hospitalization. Death by foul play or suicide has been ruled out by the police and there is no such mention or suspicion raised in the insurance co.’s investigator’s report, and it is even not the insurance co.’s case that it was a matter of foul play or suicide.

(iii)     The insurance co.’s investigator in his report has made no mention at all that the deceased insured was a “known psychiatric patient”. On the contrary he has stated that the deceased insured “was always seen in good health and never suffered from any chronic disease”.

(iv)     The State Commission, for cogent and valid reasons recorded, has held that the insurance co. could not adduce the requisite evidence to prove its assertion that the deceased insured was a “known psychiatric patient” and that the repudiation of the claim on ground of concealment of pre-existing disease was uncalled for and incorrect.

(v)     Nowhere in its internal notings and communications or in its correspondence with the complainant has the insurance co. indicated the specific psychiatric disorder per se (as for example schizophrenia or manic depressive disorder etc.) from which the deceased insured was allegedly suffering, it has used a vague generalized term “known psychiatric patient”.

(vi)     As per the insurance co.’s own requirements it had to conduct a medical examination on the deceased insured. A medical examination was purportedly conducted on 28.10.2010. The same was, in fact, a fake ruse. To ascertain whether or not a life insured had concealed pre-existing disease, the internal medical examination and the papers connected therewith have their own significance. It is relevant and material to see what declaration(s) the insured made at the time of his medical examination with the insurance co. and what report the insurance co.’s doctor gave. But here is a situation in which the insurance co.’s own medical examination is one that has been made up and in fact had never taken place. It is also not that the insured had sent somebody else in his place for the examination, neither is this insurance co.’s case. That being so, it does not lie in its mouth for the insurance co. to make an assertion that the insured was a “known psychiatric patient” and had concealed some pre-existing disease. The hard fact is that it was the insurance co.’s responsibility to undertake its requisite internal medical examination at the time of issuing its policy, and it is on record that its medical examination was nothing but a fudging concoction.

In its letter dated 18.02.2011 the insurance co. has stated that: “As per our records the medical test for risk cover under MetLife Insurance Plan, was appeared to have been undergone on 28^th Oct 2010.”

Then in its subsequent letter dated 17.03.2011 it has stated that: “As per our records the medical test for risk cover under MetLife Insurance Plan, was appeared to have been undergone on 28^th Oct 2010. As Late Mr. Jagtar Singh was already under treatment for fire accident on that day, it was evident that he did not attend to medical test for issuance of MetLife Policy.”

The letter dated 17.03.2011 is subsequent to its internal communication of 16.03.2011 which states that: “This leads to a different situation where the medicals done is a fraud and needs to be investigated? Madhavi should raise a question as to how medicals could have happened while the Pl met with a fire accident and in the hospital.. instead she is writing differently. Where is the question of considering.. it is evident that it is a fraudulent medical report.”

It is evident that inspite of question being prominently raised on the genuineness of its internal medical examination, the insurance co., rather than making inquiry and getting to the root of the matter, preferred to brush aside its fudged medical examination and to brazen out its decision of repudiation by sending loosely worded letters to the complainant. Either its stance should have been that the insured had sent somebody else to impersonate him in the examination (which it was not), or its stance should have been that within its own organization fudging of medical examination had been done and it was making the necessary inquiry and taking the necessary action in this regard (which again it was not). The insurance co. has rather preferred to ignore this disconcerting question and has chosen to arbitrarily and brazenly and intransigently put its ordinary general consumer to loss and injury, trouble and prejudice.

The insurance co. has not even attempted to inquire far less come clean on the facts and circumstances in which its own medical examination in respect of its insured was fudged, nor has it even attempted to consider making any systemic improvements for future to prevent recurrence of such instances and to avoid such loss and injury or trouble and prejudice to its consumers.

The internal notings and communications of the insurance co. are a matter of record. A mere perusal thereof shows an immature, highhanded and unaccountable attitude of taking an anyhow arbitrary decision to repudiate the claim, to turn an opaque eye to any and all of its own deficiencies and unfairnesses and deceptions.

9.       In a nutshell, it is manifestly clear that there is no evidence to suggest that the deceased insured was a “known psychiatric patient” or that there was material concealment of pre-existing disease, and it is also manifestly clear that the insurance co. fudged its internal medical examination and then intransigently brazened out its own deficiencies and unfairnesses and deceptions with least concern to the loss and injury and trouble and prejudice it caused to its consumer.

10.     Ingredients of both ‘deficiency’ in service’ within the meaning of Section 2(1)(g) & (o) and ‘unfair trade practice’ within the meaning of Section 2(1)(r) of the Act are well and truly evident.

In respect of ‘unfair trade practice’ it may be that it is a specific provision unique to The Consumer Protection Act, 1986.

Section 2(1)(r) says of “a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely:-”.

The list provided in Section 2(1)(r) is illustrative and not comprehensive or exhaustive.

That is to say, an unfair method or unfair or deceptive practice, as is judiciously determined, on facts and reasons, on fair and objective appraisal of the evidence and material on record, would qualify as ‘unfair trade practice’ within the meaning of Section 2(1)(r).

The unfair and deceptive acts of the insurance co., as summed-up above, squarely fall within the definition of ‘unfair trade practice’ under the Act 1986.

11.     On the basis of the examination made hereinabove, we endorse the appraisal made by the State Commission. We see no error in appreciation of the evidence by the State Commission, nor do we see any jurisdictional error or legal principle ignored or wrongly adjudged or miscarriage of justice having been occasioned.

The State Commission’s impugned Order is sustained. The Award made by the State Commission is confirmed. The same shall be complied with by the insurance co. through its chief executive (i.e. its chairman or managing director or director in-charge of its affairs or director in-charge of the subject-matter, whichever member of its board of directors he may be) within four weeks from today.

12.     The insurance co. is guilty of both ‘deficiency in service’ and ‘unfair trade practice’ under the Act 1986.

13.     For its ‘unfair trade practice’ per se a cost of Rs. 10 lakh is imposed on the insurance co. through its chief executive, which shall be deposited in the Consumer Legal Aid Account of the District Commission within four weeks from today.

The insurance co. through its chief executive is also ordered under 39(1)(g) of the Act 2019 (corresponding Section 14(1)(f)) of the Act 1986) to forthwith discontinue such unfair trade practice and inculcate and imbibe systemic improvements to avert such unfair and deceptive acts in future qua its consumers in general. It shall ensure the appropriate directions to all its offices / branches in this regard and shall file a report-in-compliance before the District Commission within eight weeks from today.

14.     In case of failure or omission in compliance, the District Commission shall undertake execution, for ‘enforcement’ under Section 71 and for ‘penalty’ under Section 72 of the Act 2019, as per the law.

15.     The Registry is requested to send a copy each of this Order to the parties in the petition as well as to the State Commission and the District Commission immediately. The stenographer is also requested to upload this Order on the website of this Commission immediately.