1.       This First Appeal, under Section 19 of the Consumer Protection Act, 1986, has been filed by Bajaj Allianz General Insurance Co. Ltd. (for short “the Insurance Company”), challenging order dated 09.05.2014, passed by the Gujarat State Consumer Disputes Redressal Commission at Ahmedabad (for short “the State Commission”) in Complaint No. 33 of 2009.  Vide the said order, the State Commission has allowed the Complaint filed by the Respondent/Complainant (for short “the Insured”) and directed the Insurance Company to pay him the medical treatment expenses amounting to US $ 64,400, i.e. ₹32 Lakhs, along with  9% interest from 30.06.2009 till the date of reimbursement within 30 days.  Litigation expenses quantified at ₹25,000/- were also directed to be paid by the Insurance Company.   

2.       The facts, in brief, giving rise to the present Appeal, are that on 24.09.2007 the Insured had taken a medi-claim insurance policy known as “Travel Age Elite Platinum Policy” from the Insurance Company, by paying a premium of ₹33,810/-.  Under the said policy, the sum assured was US $ 5,00,000 and it was valid upto 26.02.2008.  During the validity period of the said policy, on 10.10.2007 the Insured, while he was on a visit to USA with his wife, experienced severe headache, vomiting and eye deviation, due to which he was required to undergo medical treatment.  On 18.10.2007 surgery of Left Frontotemporal Craniotomy was conducted on him at Roosevelt Hospital, New Jersey and on 23.10.2007 he was discharged from the said hospital.  For the said hospitalization, the Insured paid the medical treatment bill of US $ 64,400, as the Insurance Company had sought some time to process the claim after scrutiny of the bills.  After returning to India, the Insured preferred a claim with the Insurance Company for reimbursement of the aforesaid amount spent on his medical treatment in USA.  However, by letter dated 06.12.2007, the claim was repudiated on the ground that, at the time of taking the policy in question, the Insured had not disclosed necessary information regarding his health.  According to the Insurance Company, as per the information available with them, the Insured, at the time of taking the policy in question, was suffering from Diabetes and Hypertension and had also undergone an Angioplasty before taking the policy in question but these material facts were not disclosed by the Insured in the proposal form and, therefore, the Insurance Company was not liable to pay the assured amount under the policy in question.

3.       Alleging deficiency of service and unfair trade practice on the part of the Insurance Company, the Insured filed a complaint before the State Commission, praying for a direction to the Insurance Company to pay to him US $ 64,400 (approximately ₹32 Lakhs) as compensation under the policy in question along with 9% interest from the date of complaint till realization.

4.       Upon consideration of the evidence adduced by both the parties, the State Commission held that there was no malicious intention on the part of the Insured in getting the policy in question and there was no nexus between the acute headache experienced by the Insured and the Angioplasty or any other disease.  The State Commission, therefore, allowed the Complaint and directed the Insurance Company to pay to the Insured the afore-stated amounts.  Hence, the present Appeal.

5.       The question for consideration is as to whether or not there was suppression of any “material fact” by the Insured, having material bearing on the repudiation of the claim by the Insurance Company under the life insurance policy?

6.       In Satwant Kaur Sandhu vs. New India Assurance Company Ltd. (2009) 8 SCC 316, it has been observed by the Supreme Court that the expression “material fact” is to be understood in general terms to mean as any fact which would influence the judgment of a prudent Insurer, in deciding whether to accept the risk or not.  If the proposer has knowledge of such fact, he is obliged to disclose it, particularly while answering questions in the proposal form.  Any inaccurate answer will entitle the Insurer to repudiate their 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, which is based on the principle of utmost faith – uberrima fides.  Good faith forbids either party from non-disclosure of the facts which the party privately knows, to draw the other into a bargain, from his ignorance of that fact and his believing the contrary. (See: United India Insurance Co. Ltd. Vs. M.K.J. Corporation [(1996) 6 SCC 428].  It has also been emphasized that 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, obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known.

7.       Bearing in mind the afore-noted principle, governing a contract of insurance, we advert to the facts at hand.  The relevant question in the proposal form (page-38 of the paper-book), on which strong reliance is placed by the Insurance Company, and, which was required to be replied by the Insured, was:

“Have you been admitted to any hospital/nursing home/clinic for treatment or observation?  Please give details”   

8.       Admittedly, the question was answered in the negative by the Insured.  Undoubtedly, this was a “material fact” and being within the knowledge of the Insured only, he was obliged to ensure correct disclosure of the same in the proposal form issued to him for the purpose of obtaining the policy in question.  Even if, for the sake of argument, as stressed by learned counsel for the Insured, it is assumed that:

(i)      the Insured had not filled up the proposal form and the act of alleged omission was on the part of the Agent of the Insurance Company;

(ii)     there was no nexus between the acute headache experienced by the Insured, due to which he was required to undergo medical treatment while in USA, and the Angioplasty, the procedure conducted on the Insured before his taking the policy in question, or any other disease; and

(iii)    he was hale and hearty at the time of taking the policy in question,

the fact remains that the Insured had signed the proposal form and it was his duty to conspicuously go through the paper(s), proposal form in this case, on which he was required to sign, for the purpose of entering into a binding contract with the Insurance Company.  The proposal form contains some hand written entries/answers, and, having signed the same, the obvious presumption has to be that he had due knowledge of what had been written therein, even if it was not in his hand.  More so, when the Insured is not an illiterate person.  Besides, it is manifest from the Certificate dated 21.12.2011 (page 89 of the paper-book) issued by Dr. S.R. Iyengar, Director/Sr. Consultant Physician & Cardiologist, Balaji Hospital, Vadodara, that in connection with the Angioplasty the Insured was admitted in the said hospital on 30.12.2006 and after the said procedure he was discharged from the hospital on 01.01.2007, i.e. well before over eight months from 24.09.2007, on which date the Insured had taken the policy in question.  The insurance being a contract between the two parties, the Insured and the Insuree, based on the principle of uberrima fidei, i.e. utmost good faith, as held in the Satwant Kaur Sandhu (supra), the Insured was required to disclose the said material facts correctly in the proposal form even if he was hale and hearty at the time of taking the policy in question.  We also find that there was no rebuttal to the afore-stated Certificate by the Insured.

In this view of the matter, we do not propose to deal with the contention of learned Counsel for the Insured that reliance cannot be placed on the Attending Physician’s Statement (page 56 of the paper-book), as it was prepared on 30.10.2007, after the treatment in question, at the behest of the Insurance Company and in fact the Insured did not suffer with Diabetes and Hypertension.

9.       Having given our anxious consideration to the material on record, we are of the opinion that the answers given by the Insured in the proposal form were untrue to his knowledge. There was clear suppression of “material facts” in regard to the health of the Insured.  It was not for the Insured to determine whether the information sought for in the aforesaid proposal form was material for the purpose of the policy in question.  At any rate, the statements made in the proposal form were untrue and incorrect.  We are, therefore, of the opinion that the Insurance Company was justified in repudiating the claim of the Insured.

10.     Resultantly, the Appeal is allowed and the orders of the State Commission are set aside.  No costs.