DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, KOZHIKODE

PRESENT: Sri. P.C. PAULACHEN, M.Com, LLB    : PRESIDENT

Smt. PRIYA.S, BAL, LLB, MBA (HRM) :  MEMBER

 Sri.V. BALAKRISHNAN, M Tech, MBA, LL.B, FIE: MEMBER

Friday, the 27^th  day of September 2024

CC. 45/2016

Complainant

Baby Fathima,

D/o Jamal Ayisha,

2/2694, Chulliyode,

Kozhikode – 673 020.

(By Adv. Sri. Syam Padman)

Opposite Parties

1.            Birla Sun Life Insurance Company Ltd,

Regd. Office: One India Bulls Centre,

Tower 1, 15^th & 16^th floor, Jupiter Mill Compound,

841, Senapati Bapat Marg,

Elphinstone Road, Mumbai – 400 013,

Rep. by its Managing Director.

2.             Birla Life Insurance,                                                                                                                                                                                                                                                                                                                                                                                                      1 & 2^nd Floor, Poyil Building,

Mavoor road, Next to New Sagar Hotel,

Kozhikode – 673 001,

Represented by its Branch Manager.

(By Adv. Sri. Sachin Daga and Adv. Sri. V.Sreeraj)

ORDER         

 By Sri. V. BALAKSRISHNAN – MEMBER

            This is a complaint filed under Section 12 of the Consumer Protection Act, 1986.

2.  The case of the complainant, in brief, is as follows:

On 20/09/2012, the complainant took a health insurance policy from 1^st and 2^nd opposite parties. The policy named Saral Health Plan bearing No. 005761947 was issued for the period from 21/09/2012 to 21/09/2032. It was a whole life policy in her name for which the pay term was 10 years and health insurance term was 20 years. The minimum annual policy premium was calculated to be Rs. 14, 908/- with no additional annual policy premium. The policy was taken by her on the representation made by the agents of 1^st and 2^nd opposite parties when they visited her house.

3. On 03/07/2013, she was injured after accidently pouring hot water over herself. Immediately she was admitted to Kozhikode District Co-operative hospital, where she was treated for the injury. Later she was discharged on 11/07/2013 and was admitted to Malabar Institute of Medical Sciences (MIMS) for further treatment on that day. She was  discharged from MIMS on 17/07/2013. Skin grafting procedure was done for her from MIMS which took place on 13/08/2013 and 14/08/2013.
4. For claiming the treatment expenses, she approached opposite parties.  An email was sent by the Agency Manager of the 2^nd opposite party on 17/07/2013, stating that he has attached 2 forms and the list of documents required to file for the insurance claim. On 22/08/2013, the same person sent a mail to customer care requesting them to send the details of the claim process with regard to Saral Health Plan, He also requested them to send the details needed to claim the expense amount. On 23/08/2013 Mr. Shomu, the agency manager received a reply from Ms. Priscilla Palande of the customer care support team stating that the conclusion regarding the eligibility of the coverage/admissibility amount can be decided once they had the full set of original documents. In the email, the list of mandatory documents  required to process the claim amount and claim form was mentioned and it was requested that the same be submitted in the nearest MDINDIA branch within 30 days from the date of discharge. The email further stated that a soft copy could be sent for the speedy processing of the claim.
5. The same mail was then forwarded to Mr. Vijith.N, Branch OPS and Accounts  on 10/09/2013 for processing the claim amount. Mr. Vijith. N sent a mail to the customer care on the same day wherein he stated that they are dispatching the claim form with supporting documents by courier on the same day, and to process the same as soon as possible. The mail was forwarded to Mr. Shomu also at the same time. On 11/09/2013, Mr. Shomu again sent the mail to customer care and with the copy marked to the complainant’s father. On 19/09/2013 Mr. Vijith and Mr. Shomu received an email from Ms. Priscilla Palande which stated that the claim for insurance amount had been lodged and that they would update them at earliest. However, no intimation was provided thereafter. Repeated requests were sent by the complainant and her family.  Then Mr. Shomu sent an email to customer care on 27/11/2013 asking them to take proper action and received a reply that the claim is under process. Later on 14/02/2014 the complainant received a letter with reference to her claim for benefits under the  policy No. 005761947, Claim No. MD 11687551, MD 11685783 and MD 11687601 which stated that on the above policy was issued on the basis of the application for health insurance signed by the complainant on 20/09/2012 and that in the said application for insurance, the question IX B was negatively answered. It was also stated that as per medical records submitted it has been revealed that the complainant is a known case of ‘Spina Bifida with Paraplegia’ since birth, and that the same was not disclosed during the proposal stage. Therefore the claim was rejected and the above policy was declared null and void from its inception. It was further stated that the opposite parties have decided to pay fund value under  the policy as an ex-gratia and hence a cheque for Rs. 6,802.34/- was made.
6. Being highly aggrieved and annoyed, the complainant’s father sent an email on 22/02/2014 to the customer care and Mr. Shomu wherein he stated that claim was filed under their policy for more than five months back and they got no information that the claim was rejected. On 26/02/2014 the complainant’s father received a reply from opposite parties that her claim could not be paid due to the cause of pre-existing diseases. From the side of the complainant it was replied stating that the treatment availed was for not for any pre-existing disease and also the actual fact that she is a Para Plegia  patient was known to the agent as well as the manager of the opposite party before issuing the insurance policy. On 28/02/2014 her father received a reply stating that the opposite parties were coordinating with the team with regard to the matter and the complainant would be updated at the earliest. A cheque for                 Rs. 6802.34/- was given to the complainant and the same was received by her under protest. This was informed to the customer care of the opposite parties on 09/07/2014. Finally the claim was rejected, stating the reason of her pre-existing diseases.
7. The complainant and her family have suffered loss, injury and hardship due to the negligence, deficiency of service and indifference and unfair trade practice on the part of the opposite parties. The opposite parties are liable and responsible to pay the claim amount and compensation for the hardship and mental agony suffered. Hence the complaint to pass an order directing the  opposite parties;                                                                                                                                                                                                                                                                                                                                                                                                                      a) To settle her claim by reimbursing the treatment and hospital expenses with interest.                                                                        b) To pay a sum of Rs. 5,00,000/- as compensation for the loss and injury incurred on account of the negligence, deficiency                   of service and unfair trade practice on the part of the opposite parties and also the cost of the proceedings.                              
8. The opposite parties jointly filed the version. All most all the averments in the complaint are denied by them. According to them, the complainant had obtained the insurance policy by suppressing and misrepresenting material information regarding her health status in the proposal form. She was suffering from Spina Bifida with Para Plegia since birth, which was not disclosed during proposal stage. Policy document which indicates a copy of the proposal form stating the policy terms and conditions were already sent to the complainant while taking the policy with a forwarding letter mentioning about 15 days free-look provision. The complainant had returned the policy documents and did not take any objection towards the policy during the said ‘free-look period’. In the version, it is stated that after careful examination of all the documents attached along with claim intimation, it is noted from the discharge summary of the complainant from the Department of Plastic Reconstructive and Aesthetic Surgery that the life assured was suffering from Spina Bifida with Para Plegia since birth and this illness was prior to her application for insurance. The insurance policy is a legal contract between the policy holder and insurer company based on the principle of good faith and is subject to the terms and conditions of the policy. The proposer is under legal and solemn obligation to disclose all  material facts correctly, honestly and truthfully to the insurer company at the time of obtaining the policy, failing which the contract is rendered void. According to the opposite parties, it is undisputed from the medical records that the complainant is suffering from Spina Bifida  with Para Plegia since birth and the complaint is to be dismissed.
9. The points that arise for determination in this complaint are;                                                                                                                                                                                                                                                                                                                                             1) Whether there was any deficiency of service  or unfair trade practice on the part of the opposite parties, as alleged?

                 2) Reliefs and costs.

10.  The evidence in this case consists of the oral evidence of PW1 and PW2  and Exts A1 to A30 on the part of the complainant. No oral evidence for opposite parties. Exts B1 to B4  were marked.
11.  Heard. Argument note is submitted by the complainant.
12. Point No 1:  In order to substantiate the case the complainant got himself examined as PW1. Also PW2, the father of the complainant was examined. PW1 and PW2 have filed proof affidavit and deposed in terms of the averments in the complaint.  Ext A1 is the insurance policy BSLI SARAL HEALTH PLAN, Ext A2 is the copy of the email dated 17.07.2013 sent from Mr. Shomu to the father of the complainant, Ext A3 is the copy of the email dated 22/08/2013 sent from Mr. Shomu to customer care, Ext A4 is the copy of the email dated 23/08/2013 sent from customer care to Mr. Shomu, Ext A5 is the copy of the email dated 10/09/2013 sent from Mr. Vijith.N to customer care, Ext A6 is the copy of the  email dated 11/09/2013 sent from Mr. Shomu to customer care with copy to father of complainant, Ext A7 is the copy of email dated 19/09/2013 sent from customer care to Vijith.N and Shomu, Ext A8 is the copy of email dated 11/11/2013 sent from Shomu to customer care, Ext A9 is the copy of the email dated 27/11/2013 sent from Mr.Shomu to customer care with copy to father of the complainant, Ext A10 is the copy of email dated 27/11/2013 sent from MDINDIA family, Ext A11 is the letter dated 14/02/2014 received by the complainant regarding the claim, Ext A12 is the copy of the email dated 22/02/2014 sent from father of the complainant to customer care, Ext A13 is the copy of email dated 26/02/2014 showing about the rejection of claims received from customer care by the father of the complainant, Ext A14 is the copy of email dated 26/02/2014 sent from father of the complainant to customer care, Ext A15 is the copy of the email dated 28/02/2014 sent from the customer care to the father of the complainant,   Ext A16 is the copy of email dated 01/03/2014 sent from the customer care to the father of the complainant,   Ext A17 is the copy of the email dated 01/03/2014 replied by father of the complainant to customer care, Ext A18 is the copy of email dated 05/03/2014 sent from customer care to the father of complainant, Ext A19 is the copy of the email dated 06/03/2014 sent from customer care to the father of the complainant, Ext A20 is the copy of the email dated 06/03/2014 sent from the father of complainant to the customer care, Ext A21 is the copy of email dated 07/03/2014 sent from the customer care to the father of complainant, Ext A22 is the copy of email dated 09/03/2014 sent from the father of complainant to the customer care, Ext A23 is the copy of email dated 11/03/2014 sent from the customer care to father of the complainant, Ext A24 is the copy of email dated 01/04/2014 sent from the father of complainant to customer care, Ext A25 is the copy of the email dated 02/04/2014 sent from customer care to the father of complainant, Ext A26 is the reply mail dated 02/04/2014 given by father of complainant to customer care, Ext A27 is the copy of email dated 04/04/2014 sent from customer care to the father of the complainant, Ext A28 is the copy of email dated 09/07/2014 sent from the father of complainant to customer care, Ext A29 is the copy of email dated 10/07/2014 sent from Ms. Priscilla Palande to the father of the complainant, Ext A30 series are the copy of the printout taken from website of the opposite party.
13. On behalf of the opposite parties Ext B1 to B4 are marked. Ext B1 is the copy of the proposal form for the policy, Ext B2 is the copy of the claim form, Ext B3  is the copy of claim rejection statement and Ext B4 is the discharge summary from MIMS Hospital.
14. The specific case of the complainant is that she took an insurance policy of first opposite party named Saral health Plan with pay term of 10 years and benefit term of   20 years. During the benefit term she was injured after accidently pouring hot water on herself and hospitalised in Kozhikode District Co-operative Hospital and MIMS Hospital Kozhikode. When the proposal for insurance claim was submitted it was rejected by opposite parties stating the complainant was   suffering from Spina Bifida with Para Plegia since birth, which was not disclosed during the proposal stage.
15.   The complainant has alleged that the terms and conditions of the policy  were not stated or explained to her . In Modern Insulators Ltd vs. Oriental Insurance Co.  Ltd. (2000)2 Supreme Court cases 734,  the Hon’ble Supreme Court has held as follows:

“It is the fundamental principle of insurance law that utmost good faith must be observed by the contracting parties and good faith forbids either party from non-disclosure of the facts which the parties know.The insured has a duty to disclose and similarly it is the duty of the insurance company and its agents to disclose all material facts in their knowledge since obligation of good faith applies to both equally.

In view of the above settled position of law we are of the opinion that the view expressed by the National Commission is not correct.As the above terms and conditions of the standard policy where in the exclusion clause was included, were neither a part of the contract of insurance nor disclosed to the appellant respondent cannot claim the benefit of the said exclusion clause.Therefore the finding of the National Commission is untenable in law”

16.   In order dated 01/12/2014 in Revision Petition No.3934/2013 (Bajaj Allianz General Insurance Company Ltd. And another vs. Achala Rudranwas Marde) the Hon’ble National Consumer Disputes Redressal Commission has held that non-disclosure of the terms and conditions is violation of utmost good faith which is the base of insurance contract between the parties.  If such exclusion clause etc. are not explained   or furnished to the insured, the same is not binding on him. The decision of the Hon’ble Supreme Court in Modern Insulators Ltd vs. Oriental Insurance Co,. Ltd, was relied upon in the above decision of the Hon’ble National Consumer Disputes Redressal Commission.
17. In the present case the above dictum is applicable. The complainant in cross examination stated that the policy was taken by her in the meeting with the agent and manager of the opposite party and they never explained the terms and conditions to her. From Ext B1 it is admitted that the pre-existing disease of complainant ‘Spina Bifida with Para Plegia’ is not specifically mentioned in Clause IX (Insurability Declaration for the life to be insured). The Hon`ble Apex Court in 2021 (0) Supreme (SC) 779- (Manmohan Nanda V/s United India Insurance Company Limited.) has observed as follows; (Paragraph 52)

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

(i) 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.

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

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

(iv) If any query or column in a proposal form is left blank then the insurance company must ask the insured to fill it up. 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 nondisclosure of a material fact, and seek to repudiate the claim.

(v). The insurance company has the right to seek details regarding medical condition, if any, of the proposed 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.

(vi). 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.

(vii). 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”.

18.  In the present case no such medical opinion was taken by the opposite parties before issuing the policy.
19. In this context, it is worthwhile to have a glance at the decision of the Hon`ble National Consumer Disputes Redressal Commission in Arum Kumar vs. New India Asssurance Company Ltd., reported in III (2017) (CPJ) 553(NC) wherein it has been held as follows: “It is not denied that the complainant has been taking the insurance policy since the year 1997. It was the bond duty of the insurance company to have verified the information given in the proposal form by obtaining the suitable expert opinion. In case certain column in the proposal form were left blank, it was obligatory on the Insurance Company 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 bharatiya Hospital stated that the complainant had difficulty in walking for a long time and history of borderline hypertension, 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 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”.
20. It is an admitted fact that there is no default in payment of health insurance premium by the complainant. The Hon’ble Apex Court in 2021 (0) Supreme (SC) 779- (Manmohan Nanda V/s United India Insurance Company Limited) has observed as follows; (Para 69)

“The object of seeking a medi claim policy is to seek indemnification in respect of a sudden illness or sickness which is not expected or imminent and which may occur overseas. If the insured suffers a sudden sickness or ailment which is not expressly excluded under the policy, a duty is cast on the insurer to indemnify the appellant for the expenses incurred thereunder.”

The above dictum is squarely applicable in this case.

21. It is also an admitted fact that the complainant was admitted to the Hospital for treatment of body burn. This specific injury to the complainant is not due to the side effects, after effects or termination of her pre-existing disease. The body burn of the complainant that happened is a sudden accident which is totally independent of her pre-existing diseases, if any. So there is no reason for the opposite parties to repudiate the insurance claim for treatment of body burn.
22. The conduct and attitude of the opposite parties including non-disclosure of the terms and conditions to the insured at the proper time and denying the legitimate claim undoubtedly amounts to gross deficiency of service. So the complainant is to be paid the insurance claim sought for her treatment of burn injury. Nothing is produced by the complainant to show the treatment expenses. However, on perusal of Ext B2, the claim form, the treatment expenses  claimed by the complainant is Rs. 43,649.4/-. This amount is not disputed or challenged by the opposite parties. An exgratia  payment of Rs. 6,802.34 was already received by the complainant. So we are of the opinion that the complainant is to be paid  Rs. 36,847/- by the opposite parties as the  balance claim of treatment. The act of the opposite parties has caused mental agony and hardship to the complainant and she is entitled to be compensated adequately. The claim for compensation is Rs. 5,00,000/- which appears to be a bit excessive. Considering the entire facts and circumstances of the case, we are of the view that a sum of Rs. 20,000/- will be a reasonable compensation in this case. The complainant is also entitled to get Rs. 5,000/- as cost of the proceedings.  
23. Point No. 2:- In the light of the finding on the above point, the complaint is disposed of as follows;
    1. CC. 45/2016 is allowed in part.

2. The opposite parties are hereby directed to pay the complainant the balance claim amount of Rs. 36,847/- (Rupees thirty six thousand eight hundred and forty seven only) with interest @ 9%  per annum from the date of this complaint i.e. 25/01/2016 till actual payment. 
3. The opposite parties are directed to pay a sum of Rs. 20,000/- (Rupees twenty thousand only) to the complainant as compensation for the mental agony and hardship suffered.
4. The opposite parties are directed to pay a sum of Rs. 5,000/- (Rupees five thousand only) as cost of the proceedings to the complainant.   
5.  The order shall be complied with, within 30 days of receipt of copy of this order.  

Pronounced in open Commission on this, the  27^th  day of September, 2024.

Date of Filing:  25/01/2016

        Sd/                                                             Sd/-                                                         Sd/-                                                                 PRESIDENT                                              MEMBER                                                    MEMBER                               

APPENDIX

Exhibits for the Complainant :

Ext A1 - Insurance policy BSLI SARAL HEALTH PLAN.

Ext A2 - Copy of the email dated 17.07.2013 sent from Mr. Shomu to the father of the complainant.

Ext A3 - Copy of the email dated 22/08/2013 sent from Mr. Shomu to customer care.

Ext A4 - Copy of the email dated 23/08/2013 sent from customer care to Mr. Shomu.

Ext A5 - Copy of the email dated 10/09/2013 sent from Mr. Vijith.N to customer care.

Ext A6 - Copy of the email dated 11/09/2013 sent from Mr. Shomu to customer care with copy to father of complainant.

Ext A7 - Copy of email dated 19/09/2013 sent from customer care to Vijith.N and Shomu.

Ext A8 - Copy of email dated 11/11/2013 sent from Shomu to customer care.

Ext A9 - Copy of the email dated 27/11/2013 sent from Mr.Shomu to customer care with copy to father of the complainant.

Ext A10 - Copy of email dated 27/11/2013 sent from MDINDIA family.

Ext A11 is the letter dated 14/02/2014 received by the complainant regarding the claim.

Ext A12 - Copy of the email dated 22/02/2014 sent from father of the complainant to customer care.

Ext A13 - Copy of email dated 26/02/2014 showing about the rejection of claims received from customer care by the father of the complainant.

Ext A14- Copy of email dated 26/02/2014 sent from father of the complainant to customer care.

Ext A15 is the copy of the email dated 28/02/2014 sent from the customer care to the father of the complainant. 

Ext A16 - Copy of email dated 01/03/2014 sent from the customer care to the father of the complainant.

Ext A17 - Copy of the email dated 01/03/2014 replied by father of the complainant to customer care.

Ext A18 is the copy of email dated 05/03/2014 sent from customer care to the father of complainant.

Ext A19 - Copy of the email dated 06/03/2014 sent from customer care to the father of the complainant.

Ext A20- Copy of the email dated 06/03/2014 sent from the father of complainant to the customer care.

Ext A21 - Copy of email dated 07/03/2014 sent from the customer care to the father of complainant.

Ext A22 - Copy of email dated 09/03/2014 sent from the father of complainant to the customer care.

Ext A23 - Copy of email dated 11/03/2014 sent from the customer care to father of the complainant.

Ext A24 is the copy of email dated 01/04/2014 sent from the father of complainant to customer care.

Ext A25 - Copy of the email dated 02/04/2014 sent from customer care to the father of complainant.

Ext A26 - Reply mail dated 02/04/2014 given by father of complainant to customer care.

Ext A27 - Copy of email dated 04/04/2014 sent from customer care to the father of the complainant.

Ext A28 - Copy of email dated 09/07/2014 sent from the father of complainant to customer care.

Ext A29 - Copy of email dated 10/07/2014 sent from Ms. Priscilla Palande to the father of the complainant.

Ext A30 series -Copy of the printout taken from website of the opposite party.

Exhibits for the Opposite Party

Ext B1 - Copy of the proposal form for the policy.

Ext B2 - Copy of the claim form.

Ext B3 - Copy of claim rejection statement.

Ext B4 -  Discharge summary from MIMS Hospital.

Witnesses for the Complainant

PW1 -  Baby Fathima (Complainant).

PW2 – E. Mohammed Koya (father of the complainant)

Witnesses for the opposite party

NIL                         

        Sd/                                                             Sd/-                                                         Sd/-                      

 PRESIDENT                                              MEMBER                                                    MEMBER                               

 True Copy,      

                                                                                                                                                         Sd/-                                                                                                

                                                                                                                                                Assistant Registrar