1.       The present Revision Petition (RP) has been filed by the Petitioner(s) against Respondent as detailed above, under section 58(1)(b) of Consumer Protection Act 2019, against the order dated 04.04.2022 of the State Consumer Disputes Redressal Commission, Chandigarh, (hereinafter referred to as the ‘State Commission’), in First Appeal (FA) No. 49/2021 in which order dated 16.06.2021, District Consumer Disputes Redressal Commission, Chandigarh (hereinafter referred to as District Commission) in Consumer Complaint (CC) no. 598/2019 was challenged, inter alia praying to set aside the order passed by the State Commission.

2.       While the Revision Petitioner(s) (hereinafter also referred to as OPs) were Respondents before the State Commission and OPs before the District Forum, the Respondent (hereinafter also referred to as Complainant) was Appellant before the State Commission and complainant before the District Commission. Notice was issued to the Respondent.  Parties filed Written Arguments/Synopsis on 17.04.2023 (Petitioners/OPs) and 23.03.2023 (Respondent/complainant) respectively.

3.       Brief facts of the case, as emerged from the RP, Order of the State Commission, Order of the District Commission and other case records are that the complainant purchased an International Medical Health Insurance Policy from the OPs, valid from 17.09.2018 to 05.03.2019, by paying a premium of Rs.17,864/-. While in Australia, the complainant experienced sudden chest pain on 29.09.2018 and underwent tests followed by a stents procedure, discharged on 03.10.2018. Further treatment including another stent placement occurred on 22.11.2018, with discharge on 23.11.2018. The complainant's claim for cashless benefits under the policy was rejected on 07.12.2018, citing non-disclosure of pre-existing conditions: Coronary Artery Disease (CAD) & Dyslipidemia. Consequently, the complainant paid hospital bills totaling 31,499/- Australian Dollars out of pocket. Upon returning to India in March 2019, the complainant submitted a claim for reimbursement, supported by relevant documentation, which was rejected on 16.04.2019 for the same reason. Subsequently, the complainant filed a consumer complaint before the District Commission.

4.       Vide Order dated 16.06.2021, in the CC no. 598/2019 the District Commission has dismissed the complaint. Aggrieved by the said Order dated 16.06.2021 of District Commission, Complainant appealed in State Commission and the State Commission vide order dated 04.04.2022 in FA No. 49/2021 has directed OPs to pay the entire claim amount to the complainant which fell under policy alongwith 9% interest p.a. from the date of repudiation of claim; to pay Rs. 50,000/- as compensation; to pay Rs. 25,000/- as cost of litigation.

5.       Petitioner(s) have challenged the said Order dated 04.04.2022 of the State Commission mainly on following grounds:

1. The impugned order is solely based on assumptions and conjectures, neglecting to properly consider the documents submitted by the petitioner/OPs. The State Commission failed to recognize that the respondent/complainant withheld crucial information regarding pre-existing ailments such as Coronary Artery Disease (CAD) and Dyslipidemia prior to obtaining the policy in question. This omission violates the fundamental principle of Utmost Good Faith governing insurance contracts. By not disclosing accurate information about pre-existing ailments, the complainant breached this principle, justifying the rejection of the claim by the OPs. The State Commission's observation regarding the lack of evidence for the treatment of CAD and Dyslipidemia is unclear. The Outpatient Card dated 27.10.2014 from the Postgraduate Institute of Medical Education and Research, Chandigarh, clearly indicates the complainant's pre-existing conditions, which were not disclosed at the time of policy inception.

2. The complainant had the responsibility to disclose all pre-existing ailments, including Coronary Artery Disease (CAD) and Dyslipidemia, despite having disclosed a history of blood pressure. The rejection of the claim by the Opposite Parties (OPs) was justified under the principle of Utmost Good Faith. The State Commission's conclusion that the OPs cannot reject the claim after issuing the policy is unfounded. Mere disclosure of a pre-existing disease does not automatically guarantee coverage under the insurance policy terms and conditions. The State Commission's assertion regarding the OPs' inability to repudiate the claim due to accepting the premium and issuing the policy is erroneous. The complainant was responsible for accurately completing all sections of the Proposal form to facilitate proper underwriting of the risk by the OPs. Furthermore, the State Commission's award of Rs. 50,000/- for harassment and Rs. 25,000/- for litigation expenses is arbitrary and does not align with established legal principles. Similarly, the State Commission's decision to award default interest at the rate of 12% per annum is arbitrary and should be revised to align with legal precedent.

3. The State Commission's failure to strictly construe the terms of the insurance contract is evident. Precedents set by the Hon'ble Supreme Court, such as in Export Credit Guarantee Corpn. Of India Ltd. Vs. M/s. Garg Sons International 2014 (1) SCC 686 and General Assurance Society Ltd. Vs. Chandumull Jain & Anr (1966) 3 SCR 500, emphasize the importance of interpreting insurance policy terms strictly, without altering their nature or extending the liability of the insurer beyond what is expressly covered. Additionally, the decision in Oriental Insurance Co. Ltd. Vs. Sony Cherian (II 1999 CPJ 13 SC), highlights that the terms of the insurance policy must be strictly construed to determine the extent of the insurer's liability, with the insured unable to claim anything beyond what is covered by the policy. Therefore, the dismissal of the complainant's complaint by the District Commission was appropriate, and the order of the State Commission should be set aside.

4. The State Commission's failure to appreciate the complexity of the disputed factual questions in the case is evident. Such matters often require a detailed examination of evidence and cross-examination, which are typically conducted in civil courts rather than through summary trials under the Consumer Protection Act. Therefore, the complaint under the Consumer Protection Act should have been deemed not maintainable and dismissed. Furthermore, the State Commission's reasoning regarding the insured's duty of disclosure is flawed. Precedents set by the Hon'ble Supreme Court, as seen in Oriental Insurance Co. Ltd. v. Mahendra Construction, (2019) 18 SCC 209, establish that insurance contracts are governed by the principle of utmost good faith. This principle mandates full disclosure of all material facts by the insured, failure of which may result in the avoidance of the insurance contract. The District Commission's decision to dismiss the complainant's complaint aligned with these legal principles, and thus, the order of the State Commission should be set aside.

6.       Heard counsels of both sides.  Contentions/pleas of the parties, on various issues raised in the RP, Written Arguments, and Oral Arguments advanced during the hearing, are summed up below.

1.  The counsel for petitioners/OPs argued that the respondent/complainant suppressed material facts regarding his pre-existing ailments of Coronary Artery Disease (CAD) & Dyslipidemia when obtaining the policy, thus breaching the principle of Utmost Good Faith inherent in insurance contracts. They argue that the rejection of the claim was justified as per the policy terms and conditions, citing Clause 7.1 regarding Disclosure of Information Norm.

2. The counsel asserts that the State Commission failed to appreciate the significance of the complainant's non-disclosure and the contractual implications thereof. They argue that had the complainant provided accurate information about his pre-existing conditions, the policy would not have been issued or would have been issued under different terms. The State Commission failed to consider crucial evidence, namely the Outpatient Card dated 27.10.2014, which clearly indicated the complainant's pre-existing conditions of Coronary Artery Disease (CAD) and Dyslipidemia. This document formed the basis of the claim rejection and was not disputed by the complainant.

3. Furthermore, the State Commission erred in asserting that OPs should have conducted mandatory medical tests on the complainant, given his disclosed history of high blood pressure for five years, especially considering his age. The counsel argued that it was the complainant's responsibility to disclose all pre-existing ailments, and the OPs cannot be compelled to conduct medical tests for every insured individual. Moreover, the State Commission erroneously held that they cannot plead the columns regarding other diseases in the proposal form were left blank. It was the complainant's duty to truthfully and correctly fill all columns in the Proposal form at the time of insurance to enable accurate underwriting of the risk. Additionally, the interest awarded by the State Commission is on the higher side and should not exceed 6% as per the law laid down by the Hon'ble Supreme Court. The awards for compensation for harassment and litigation expenses, is arbitrary and erroneous. The counsel argued that the State Commission erred in awarding default interest at 12% per annum, which they consider to be arbitrary and erroneous.

4. The State Commission failed to appreciate the complexity and disputed nature of the facts involved in the case. Such matters cannot be adequately resolved through a summary trial under the Consumer Protection Act but require a detailed examination of evidence and cross-examination in a civil court setting. Therefore, the complaint under the Consumer Protection Act was not maintainable and should have been dismissed.

5. The counsel contends that the State Commission failed to uphold fundamental legal principles governing the interpretation of insurance contracts, as established by the Hon'ble Supreme Court in Export Credit Guarantee Corpn. Of India Ltd. Vs. M/s. Garg Sons International 2014 (1) SCC 686, the Supreme Court emphasized the paramount importance of the words used in the contract, prohibiting the court from altering or modifying them. The insurance policies bind both the insured and insurer, and any claims made must adhere strictly to the terms outlined in the policy. Additionally, the counsel reference the decision in General Assurance Society Ltd. Vs. Chandumull Jain & Anr (1966) 3 SCR 500, wherein the Supreme Court emphasized the duty of the court to interpret contracts based on the language used by the parties. The State Commission's failure to recognize these principles led to an erroneous decision in favor of the complainant. Moreover, the counsel cites Oriental Insurance Co. Ltd. Vs. Sony Cherian (II 1999 CPJ 13 SC), where the Supreme Court reiterated that insurance policies represent a contract between the insured and the insurer. The terms of this agreement must be strictly adhered to, and any claims made by the insured must fall within the coverage explicitly outlined in the policy.

6. The counsel for Petitioners/OPs also relied on following judgements:-

1. In City Union Bank Ltd. v. R. Chandramohan, (2023) 7 SCC 775, the Hon’ble Supreme Court held that:-

“14. ……The “deficiency in service”, as well settled, has to be distinguished from the criminal acts or tortious acts. There could not be any presumption with regard to the wilful fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance in service, as contemplated in Section 2(1)() of the Act. The burden of proving the deficiency in service would always be upon the person alleging it.”

2. In Oriental Insurance Co. Ltd. v. Mahendra Construction, (2019) 18 SCC 209, the Hon’ble Supreme Court held that:-

“9.Ncdrc entered a finding that since the previous insurance policy had been enclosed with the proposal form, the insurer could, upon further enquiry, have learnt of the status of the claims under the earlier policy. Ncdrc considered the Exception to Section 19 of the Contract Act, 1872 and held that the insurer could have easily verified the claims submitted by the insured under the previous policy. It was thus held that the insurer cannot deny the benefit of insurance on account of the information not having been disclosed in the proposal form. However, Ncdrc noted that the insured had not expressly disclosed the previous claim and in consequence, deducted twenty-five per cent of the amount payable under the contract of insurance.

10. In our view, this line of reasoning of Ncdrc is flawed. Insurance is governed by the principle of utmost good faith, which imposes a duty of disclosure on the insured with regard to material facts. In  [Twelfth Edition, Sweet and Maxwell (2012).] the rule concerning duty of disclosure is stated in the following terms:

“[Subject to certain qualifications considered below], the assured must disclose to the insurer all facts material to an insurer's appraisal of the risk which are known or deemed to be known by the assured but neither known or deemed to be known by the insurer. Breach of this duty by the assured entitles the insurer to avoid the contract of insurance so long as he can show that the non-disclosure induced the making of the contract on the relevant terms…”

Elaborating on the principle, in  v.  [ v. , (1991) 1 SCC 357] , this Court has held : (SCC p. 359, para 7)

“7. … It is well settled that a contract of insurance is contract uberrima fides and there must be complete good faith on the part of the assured. The assured is thus under a solemn obligation to make full disclosure of material facts which may be relevant for the insurer to take into account while deciding whether the proposal should be accepted or not. While making a disclosure of the relevant facts, the duty of the insured to state them correctly cannot be diluted.”

11. In LIC v. Asha Goel [LIC v. Asha Goel, (2001) 2 SCC 160] , a two-Judge Bench of this Court held thus : (SCC p. 168, para 12)
“12. … The contracts of insurance including the contract of life assurance are contracts uberrima fides and every fact of material (sic material fact) must be disclosed, otherwise, there is good ground for rescission of the contract. The duty to disclose material facts continues right up to the conclusion of the contract and also implies any material alteration in the character of the risk which may take place between the proposal and its acceptance. If there are any misstatements or suppression of material facts, the policy can be called into question. For determination of the question whether there has been suppression of any material facts it may be necessary to also examine whether the suppression relates to a fact which is in the exclusive knowledge of the person intending to take the policy and it could not be ascertained by reasonable enquiry by a prudent person.”

12. In Satwant Kaur Sandhu v. New India Assurance Co. Ltd. [Satwant Kaur Sandhu v. New India Assurance Co. Ltd., (2009) 8 SCC 316 : (2009) 3 SCC (Civ) 366] , a two-Judge Bench of this Court held that under a contract of insurance, the insured is under a “solemn obligation” to make a true and full disclosure of information asked for in the proposal form : (SCC p. 322, para 18)
“18. … Nonetheless, it is a contract of insurance falling in the category of contract uberrimae fidei, meaning a contract of utmost good faith on the part of the assured. Thus, it needs little emphasis that when an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge. It is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not. Of course, the obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known. The obligation to disclose necessarily depends upon the knowledge one possesses. His opinion of the materiality of that knowledge is of no moment.”
(emphasis supplied)
It was further held there is a clear presumption that any information sought in the proposal form is a “material fact” : (Satwant Kaur case [Satwant Kaur Sandhu v. New India Assurance Co. Ltd., (2009) 8 SCC 316 : (2009) 3 SCC (Civ) 366] , SCC p. 324, para 25)
“25. The upshot of the entire discussion is that in a contract of insurance, any fact which would influence the mind of a prudent insurer in deciding whether to accept or not to accept the risk is a “material fact”. If the proposer has knowledge of such fact, he is obliged to disclose it particularly while answering questions in the proposal form. Needless to emphasise that any inaccurate answer will entitle the insurer to repudiate his liability because there is clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance.”

7. The counsel for the respondent/complainant asserted that the complainant availed a Travel Insurance Policy named Platinum Ex US Canada Single Policy Ex C-1 from the petitioner/OP insurance company, valid from 17.09.2018 to 05.03.2019 for 170 days, with a premium of Rs. 17,864/- and a sum insured of USD 50,000 (approx. Rs. 41,71,000/-). Notably, no terms and conditions of the insurance policy were provided to the complainant, only an insurance certificate via email, and no medical test was conducted before issuing the policy. During a visit to Australia, the complainant encountered a medical problem and had to be hospitalized on two occasions. Despite this, the OP refused a cashless claim, citing non-disclosure of pre-existing diseases. The complainant paid the hospital bill of 31,499 AUD (approx. Rs. 17,26,546/-)  out of pocket and subsequently submitted a medical reimbursement claim upon returning to India. However, the OP repudiated the claim on 16.04.2019, alleging non-disclosure of pre-existing diseases.

8. Following the dismissal of the complaint by the District Commission on 16.04.2021, the complainant appealed to the State Commission, which set aside the earlier decision on 04.04.2022. The State Commission ruled in favor of the complainant, granting the claim along with 12% interest from the date of repudiation, Rs. 50,000/- as compensation, and Rs. 25,000/- as the cost of litigation. The OP's revision petition does not fall within the purview of section 58(1)(b) of the Consumer Protection Act 2019, as they failed to establish that the State Commission had exercised jurisdiction not vested in it or had failed to exercise jurisdiction vested in it by law. Additionally, the OP's argument that the complainant concealed information regarding pre-existing diseases is unfounded, as the proposal form clearly indicates disclosure of such conditions. Moreover, issuing the policy despite incomplete columns in the proposal form indicates the OP's awareness of the complainant's medical history, precluding them from denying the claim on these grounds.

9. In response to the OP's plea regarding the OPD (Outpatient Department) card dated 27.10.2014, the counsel for complainant asserts that the visit to PGIMER, Chandigarh (Post Graduate Institute of Medical Education & Research) on that date was for a general checkup at the age of 60 years, and the doctor prescribed some medicines. Subsequently, there were no further visits to PGIMER or any other hospital for the treatment of CAD or Dyslipidemia, as the complainant maintained good health, except for high blood pressure. The OP's reliance on the PGI OPD Card without proper investigation is therefore inappropriate and should be disregarded.

10. As per the Supreme Court order mentioned, the OP has evidently violated rules and regulations by issuing a policy despite being aware of the pre-existing disease and high blood pressure of the insured for the last five years. Moreover, crucial columns of the proposal form were left blank, yet the OP issued the insurance cover without requesting a medical test. This behavior indicates a prioritization of premium collection over due diligence in assessing risk. Once a contract is concluded, it must be implemented faithfully. However, the insurer's repudiation of the claim demonstrates a malicious intent to deny the complainant's genuine claim, constituting an arbitrary exercise of power. Therefore, the repudiation by the insurer is legally flawed and amounts to a deficiency in service. The impugned repudiation letter should be quashed, and the complainant is entitled to the mediclaim of 31,499 Australian Dollars (approx. Rs. 17,26,546/-). No policy terms containing exclusion clauses were ever disclosed or supplied to the complainant, as per the legal principles established by the apex court. Therefore, any repudiation based on undisclosed exclusion clauses is untenable and should be invalidated.

11. As per the Supreme Court order mentioned, the OP has evidently violated rules and regulations by issuing a policy despite being aware of the pre-existing disease and high blood pressure of the insured for the last five years. Moreover, crucial columns of the proposal form were left blank, yet the OP issued the insurance cover without requesting a medical test. This behavior indicates a prioritization of premium collection over due diligence in assessing risk. Once a contract is concluded, it must be implemented faithfully. However, the insurer's repudiation of the claim demonstrates a malicious intent to deny the complainant's genuine claim, constituting an arbitrary exercise of power. Therefore, the repudiation by the insurer is legally flawed and amounts to a deficiency in service. The impugned repudiation letter should be quashed, and the complainant is entitled to the mediclaim of 31,499 Australian Dollars (approx. Rs. 17,26,546/-). No policy terms containing exclusion clauses were ever disclosed or supplied to the complainant, as per the legal principles established by the apex court. Therefore, any repudiation based on undisclosed exclusion clauses is untenable and should be invalidated.

12. The counsel relied on Manmohan Nanda v. United India Assurance Co. Ltd., (2022) 4 SCC 582, where the Hon’ble Supreme Court held that:-

“55. On a consideration of the aforesaid judgments, the following principles would emerge:

55.1. There is a duty or obligation of disclosure by the insured regarding any material fact at the time of making the proposal. What constitutes a material fact would depend upon the nature of the insurance policy to be taken, the risk to be covered, as well as the queries that are raised in the proposal form.

55.2. What may be a material fact in a case would also depend upon the health and medical condition of the proposer.

55.3. If specific queries are made in a proposal form then it is expected that specific answers are given by the insured who is bound by the duty to disclose all material facts.

55.4. If any query or column in a proposal form is left blank then the Insurance Company must ask the insured to fill it up. If in spite of any column being left blank, the Insurance Company accepts the premium and issues a policy, it cannot at a later stage, when a claim is made under the policy, say that there was a suppression or non-disclosure of a material fact, and seek to repudiate the claim.

55.5. The Insurance Company has the right to seek details regarding medical condition, if any, of the proposer by getting the proposer examined by one of its empanelled doctors. If, on the consideration of the medical report, the Insurance Company is satisfied about the medical condition of the proposer and that there is no risk of pre-existing illness, and on such satisfaction it has issued the policy, it cannot thereafter, contend that there was a possible pre-existing illness or sickness which has led to the claim being made by the insured and for that reason repudiate the claim.

55.6. The insurer must be able to assess the likely risks that may arise from the status of health and existing disease, if any, disclosed by the insured in the proposal form before issuing the insurance policy. Once the policy has been issued after assessing the medical condition of the insured, the insurer cannot repudiate the claim by citing an existing medical condition which was disclosed by the insured in the proposal form, which condition has led to a particular risk in respect of which the claim has been made by the insured.

55.7. In other words, a prudent insurer has to gauge the possible risk that the policy would have to cover and accordingly decide to either accept the proposal form and issue a policy or decline to do so. Such an exercise is dependent on the queries made in the proposal form and the answer to the said queries given by the proposer….”

7.       We have carefully gone through the orders of the State Commission, District Forum, other relevant records and rival contentions of the parties. The case of the Petitioner is that the complainant failed to fill in the required columns regarding disease in the proposal form. However, it is seen that the complainant did disclose a history of high blood pressure for the past 5 years. Despite this disclosure, the OPs proceeded to issue the insurance policy upon receipt of the premium from the complainant. Therefore, they cannot now reject the claim based on the complainant's failure to fill in certain columns. Even if any column was left blank, the OPs could have requested the appellant to fill it. This becomes more important considering that the complainant did declare that he has PED (Pre-existing Disease). Answer to ‘Any other disease or ailments not mentioned above’ has also been given in affirmative by mentioning ‘other diseases description’ as ‘Blood pressure for last 5 years’. This clearly shows that complainant did declare that he has atleast one of the five listed diseases under the first question, ‘Does any insured has PED’, which was answered ‘yes’, but none of the five boxes listed under this question was ticked. Hence, in this situation, the OP, before accepting and issuing the policy, ought to have told the complainant to declare as to which of the five pre-existing diseases listed under this question he has and should have made him tick the relevant column(s). In fact, this was a fit case where the OP should have opted for getting the medical examination done before issuing the policy, even if it was not mandatory, as has been contended by the OP, especially considering that the insured was above 60 years, having blood pressure for 5 years, declared that he has atleast one of the five listed pre-existing disease, and it was an overseas mediclaim policy. This is not a case where the insured gave a wrong answer by mentioning ‘No’ or giving no answer/leaving blank against the question ‘does any insured has PED’, rather, he specifically said ‘yes’ to this question. Hence, this cannot be treated as suppression of material fact by the complainant. By accepting the premium and issuing the policy despite the blank columns, the OPs cannot later repudiate the claim based on alleged suppression or non-disclosure by the complainant. Moreover, the OPs have failed to provide any evidence to prove that the appellant visited any hospital for treatment of any disease, including CAD and Dyslipidemia, except on 27.10.2014. At the time of obtaining the insurance policy, the complainant was in good health except for high blood pressure, which was disclosed in the proposal form. The reliance is placed on the Hon’ble Supreme Court judgement, Manmohan Nanda v. United India Assurance Co. Ltd., (2022) 4 SCC 582, where it was observed that the duty of disclosure by the insured regarding any material fact at the time of making the proposal is well-established. The insurance company must seek details regarding the medical condition of the proposer and assess the likely risks before issuing the policy. Once the policy is issued after assessing the medical condition of the insured, the insurer cannot later repudiate the claim based on a disclosed existing medical condition that led to the claim. In para 55.4 of this judgement, Hon’ble Supreme Court has observed that “55.4. If any query or column in a proposal form is left blank then the Insurance Company must ask the insured to fill it up. If in spite of any column being left blank, the Insurance Company accepts the premium and issues a policy, it cannot at a later stage, when a claim is made under the policy, say that there was a suppression or non-disclosure of a material fact, and seek to repudiate the claim.”

8.  Hence, we are of the view that the State Commission has given a well-reasoned order. We find no illegality or material irregularity or jurisdictional error in the order of the State Commission, hence the same is upheld. Accordingly, the RP is dismissed.    

9.       The pending IAs in the case, if any, also stand disposed off.