STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

Bajaj Allianz General Insurance Company Limited, SCO No.139-140, 1st floor, Sector 8-C, Chandigarh, through its Manager Legal Sh. Sachin Ohri.

……Appellant/Opposite Party

V e r s u s

1.    Nitin Verma son of Sh.Ashwani Verma, Aged 30 years, resident of H.No.5486, Sector 38 (West), Chandigarh. (Assignee, Legal Heir and son of Late Mrs.Suman Verma, the deceased insured).

2.    Ashwani Verma s/o Dr.Ram Gopal Verma, Aged 55 years, r/o H.No.5486, Sector 38 (West), Chandigarh. (Husband & Legal Heir of Late Mrs.Suman Verma, the deceased insured).

              ....Respondents/complainants

Appeal under Section 15 of the Consumer Protection Act, 1986.

BEFORE:   JUSTICE SHAM SUNDER (RETD.), PRESIDENT.

                MRS. NEENA SANDHU, MEMBER.

Argued by: Sh. Paras Money Goyal, Advocate for the appellant.

                   Sh. Parminder Singh, Advocate for the respondents.

PER JUSTICE SHAM SUNDER (RETD.), PRESIDENT

              This appeal is directed against the order dated 27.06.2012 rendered by the District Consumer Disputes Redressal Forum-I, U.T., Chandigarh (hereinafter to be called as the District Forum only), vide which, it accepted the complaint, filed by the complainants (now respondents) and directed the Opposite Party (now appellant) as under:-

“As a result of the above discussion, we allow this complaint and direct the OP Insurance Company to pay $10659 (US) in the Indian Currency Value, to be calculated on the basis of May, 2011 Rates, to the complainants.  The OP is also directed to pay compensation of Rs.30,000/- along with litigation cost of Rs.15,000/-.

This order be complied with by the OP within a period of 30 days, failing which they shall be liable to pay the above awarded amount along with interest @12% p.a. from the date of repudiation of the claim i.e. 2.6.2011 (Ann.C-9) till its actual payment, besides paying litigation costs”.

2.             The facts, in brief, are that Smt. Suman Verma, wife of complainant No.2, took a Travel Care Insurance Policy – Ann. C-1, from the Opposite Party,  on 15.4.2011, effective for the period from 22.4.2011 to 20.6.2011. It was stated that the Opposite Party, did not issue the terms and  conditions of the said Policy. Smt. Suman Verma, died on 28.04.2011 in United States of America (U.S.A.).  Thereafter, complainant No.1, son of  Smt. Suman Verma, filed a claim, with the Opposite Party, in the sum of Rs.5,01,414/-,  alongwith copy of the Demographic Report dated 28.4.2011 (Ann.C-2), Investigation Report dated 20.5.2011 (Ann. C-3), Report of Final Cause of Death, dated 2.5.2011 (Ann.C-4), Autopsy Protocol Report dated 29.04.2011 (Ann.C-5), Passport of the insured, with the Custom Clearance of US Authorities,  and the prescription of Dr.Murlidharan (Ann.C-7). However, the Opposite Party, illegally repudiated the claim of the insured, filed by her son-complainant no.1, vide letter dated 02.06.2011 (Ann.C-9) on the ground, that she, was suffering from pre-existing diseases, but she did not disclose the same, at the time of filling in and signing the proposal form, and, as such, her case, fell within the exclusion Clauses, of the Policy, in question.  It was further stated that the aforesaid act of the Opposite Party, amounted to deficiency, in rendering service, as also indulgence into unfair trade practice. When the grievance of the complainants, was not redressed, left with no alternative, a complaint under Section 12 of the Consumer Protection Act, 1986 (hereinafter to be called as the Act only), was filed, directing the Opposite Party to pay Rs.5,01,414/- i.e. the total cost of evacuation and repatriation of the remains of the insured, including other risks as mentioned in the policy, alongwith interest@12% P.A.; compensation in the sum of Rs.50,000/- for mental agony and physical harassment; and cost of litigation to the tune of Rs.15,000/-.

3.             The Opposite Party, in its written version,  admitted that Smt. Suman Verma (now deceased), at the time when she was alive, took a Travel Care Insurance Policy from it,  on 15.4.2011, effective for the period from 22.4.2011 to 20.6.2011. It was also admitted that she died on 28.04.2011, in United States of America (U.S.A.). It was also admitted that, complainant no.1, being one of her legal heirs, submitted the claim, alongwith the documents, mentioned in the complaint, with it (Opposite Party). It was, however, stated that that the terms and conditions of the Insurance Policy were duly sent to the insured, in the normal course. It was further stated that Smt. Suman Verma (now deceased), was suffering from various ailments. It was further stated that she furnished wrong information, in the proposal form, to get an insurance cover.  It was further stated that the documents submitted by her son i.e. complainant no.1, revealed that she (Smt. Suman Verma) was a chronic patient of asthma, depression and hypothyroidism, including obesity. It was further stated that since, she had not disclosed that she was suffering from the pre-existing diseases, at the time of taking the Insurance Policy, the claim, lodged by her son-complainant no.1, was rightly repudiated by it (Opposite Party). It was further stated that neither there was any deficiency, in rendering service, on the part of the Opposite Party, nor it indulged into unfair trade practice. The remaining averments, were denied, being wrong.

4.             The Parties led evidence, in support of their case.

5.             After hearing the Counsel for the parties, and, on going through the evidence, and record of the case, the District Forum, accepted the complaint, in the manner, referred to, in the opening para of the instant order. 

6.             Feeling aggrieved, the instant appeal, has been filed by the appellant/Opposite Party.

7.             We have heard the Counsel for the parties, and, have gone through the evidence, and record of the case, carefully. 

8.             The Counsel for the appellant, submitted that the contract of insurance, being based on utmost good faith, it was the duty of Smt. Suman Verma (now deceased), to disclose to the Opposite Party, with regard to the pre-existing diseases, with which she was afflicted, at the time of taking the policy. He further submitted that since, from Annexure C-3, copy of the Investigation Report, submitted by the complainants, in the complaint, it was established that Smt. Suman Verma (now deceased), had a history of asthma, depression and hypothyroidism, it means that she was suffering from such pre-existing diseases. He further submitted that  Smt. Suman Verma, when she was alive, at the time of filling in and signing the proposal form Annexure R-2, answered the question, as to whether, she was suffering from, or had ever suffered from any illness/disease/ailment upto the date of making the proposal, as “N.A.”(Not applicable). He further submitted that she also answered another question, as to whether, she was currently or in past, had been on any medications, as “N.A.”(Not applicable). He further submitted that since Smt. Suman Verma, when she was alive, at the time of filling in and signing the proposal form Annexure R-2, did not disclose, with regard to the pre-existing diseases, referred to above, and, as such, concealed the material facts, there was breach of good faith, on which the contract of insurance, was based. He further submitted that the terms and conditions of the Insurance Policy were duly supplied to the insured. He further submitted that, as per the exclusion Clauses 2.4 and 2.4.12, the Opposite Party was right, in repudiating the claim of the insured, lodged by complainant no.1, on the ground of concealment of material facts, referred to above. He further submitted that the District Forum, was wrong, in accepting the complaint. He further submitted that the order of the District Forum, being illegal and invalid, is liable to be set aside.

9.             On the other hand, the Counsel for the respondents/complainants, submitted that the terms and conditions of the Insurance Policy were not supplied to  Smt. Suman Verma (now deceased), at any point of time, and, as such, the Opposite Party could not take any benefit of the exclusion Clauses, contained therein. He further submitted that, had the terms and conditions of the Insurance Policy, been supplied to the insured, and, ultimately, it had been found that she concealed the material facts, with regard to her pre-existing diseases, the exclusion Clauses, could be invoked by the Opposite Party. He further submitted that, no help, therefore, from the exclusion Clauses, could be taken by the Opposite Party, for repudiating the claim of Smt. Suman Verma (now deceased), lodged by complainant no.1, being her legal heir, on account of her death. He further submitted that the order of the District Forum, being legal and valid, is liable to be upheld.

10.           The first question, that falls for consideration, is, as to whether, the terms and conditions of the Insurance Policy, were supplied to Smt. Suman Verma (now deceased), or the complainants, being her legal heirs, or not. In paragraph number 3 of the complaint, it was, in clear-cut terms, stated by the complainants, that the representative of the Opposite Party, informed the insured and complainant no.2, that the terms and conditions of the Insurance Policy, shall be delivered later on, in due course of time, but till the date of filing of the complaint, no such terms and conditions were received. In reply to paragraph number 3 of the complaint, the Opposite Party, in paragraph number 3 of the written version, stated that the said terms and conditions were sent to the insured/complainants, in due course of business. In case, the terms and conditions of the Insurance Policy were sent to Smt. Suman Verma (now deceased), or the complainants, in the normal course of business, then there must have been some receipt, in regard to the delivery of the same, with the Opposite Party. In its written version, it was not specifically stated by the Opposite Party, as to by which mode, the terms and conditions aforesaid, were supplied to Smt. Suman Verma (now deceased), or the complainants. In the absence of production of any documentary evidence, by the Opposite Party, regarding the supply of terms and conditions of the Insurance Policy, to the insured, or the complainants, the version set up by them (complainants), in the complaint, duly supported by their joint affidavit, that they or the insured were never supplied the same, could be believed to be correct. The Insurance Regulatory and Development Authority(Protection of Policy Holders’ Interests) Regulations, 2002, framed by Insurance Regulatory and Development Authority (IRDA), in exercise of  the powers, vested in it,  under Section 114(A) of the Insurance Act, 1938, read with Sections 14 and 26 of the Insurance Regulatory and  Development Authority Act,1999, came into effect from the year 2002. Therefore, the policies, which were issued after 2002, were covered under the said Regulations. The Insurance Companies are bound by the aforesaid Regulations, which are mandatory, in nature. These Regulations were framed by IRDA to protect the interests of the policy holders. Regulation 3 is required to be followed by the Insurance Companies, so that the terms of the Insurance Policy do not operate harshly, against the insured, and in favour of the insurer. Regulation 3 reads as under:-

“3. Point of sale—(1) Notwithstanding anything mentioned in Regulation 2(e) above, a prospectus of any insurance product shall clearly state the scope of benefits, the extent of insurance cover and in an explicit manner explain the warranties; exceptions and conditions of the insurance cover and, in case of life insurance, whether the product is participating (with profits) or non-participating (without profits). The allowable rider or riders on the product shall be clearly spelt out with regard to their scope of benefits, and, in no case, the premium relatable to health related or critical illness riders in the case of term or group products shall exceed 100% of premium under the basic product. All other riders put together shall be subject to a ceiling of 30 per cent of the premium of the basic product. Any benefit arising under each of the rider shall not exceed the sum assured under the basic product.

Provided that the benefit amount under riders shall be subject to Section 2(11) of the Insurance Act, 1938.

Explanation -—the rider or riders attached to a life policy shall bear the nature and character of the main policy, viz. participating or non-participating and accordingly the life insurer shall make provisions, etc., in its books.

(2) An insurer or its agent or other intermediary shall provide all material information in respect of a proposed cover to the prospect to enable the prospect to decide on the best cover that would be in his or her interest.

(3) Where the prospect depends upon the advice of the insurer or his agent or an insurance intermediary, such a person must advise the prospect dispassionately.

(4) Where, for any reason, the proposal and other connected papers are not filled by the prospect, a certificate may be incorporated at the end of proposal form from the prospect that the contents of the form and documents have been fully explained to him and that he has fully understood the significance of the proposed contract.

(5) In the process of sale, the insurer or its agent or any intermediary shall act according to the code of conduct prescribed by—

(i)        the Authority;

(ii)      The Councils that have been established under Section 64C of the Act; and

(iii)   The recognized professional body or association of which the agent or intermediary or insurance intermediary is a member”.

11.                     The aforesaid Regulation makes it clear that—

(i)     the prospectus of insurance product is required to clearly state the scope of benefits, the extent of insurance cover and in explicit manner explain the warranties, exceptions and conditions of the insurance cover. The phraseology used is “mandatory” by providing that it shall be stated clearly;

(ii)    Sub-Regulation (2) provides that an insurer or its agent or other intermediary shall provide all material information in respect of the proposed cover to the insured;

(iii)     Sub-Regulation 4 also provides that if the proposal and other connected papers are not filled by the prospect, a certificate is required to be incorporated at the end of the Proposal Form from the prospect that the contents of the form and documents have been fully explained to him.

12.           Regulation 3, which has been extracted above, clearly reveals that it is the duty of the insurer to supply the entire information, by issuance of prospectus of any insurance product, stating therein the scope of benefits, the extent of insurance cover, in an explicit manner explaining the warranties; exceptions and terms and conditions of the insurance cover. Not only this, in M/s Modern Insulators Ltd. Vs Oriental Insurance Co. Ltd.I(2000)CPJ1(SC),  the principle of law, laid down, was to the effect, that 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 knew. The insured has a duty to disclose all the facts, and, similarly, it was 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. It was, thus, the duty of the Insurance Company to disclose all the facts and circumstances, relating to the insurance cover, to the insured.  It was also required of it, to apprise the insured of the benefits of the insurance, exclusion Clauses, contained therein, as also the terms and conditions and the warranties referred to, in the same. It was, under these circumstances, the utmost duty of the insurer to supply the insurance Policy and the terms and conditions thereof, to the insured, so as to enable her to go through the same and understand the Clauses contained therein. Not only this, it was also the duty of the Insurance Agent or Insurance Adviser to explain the terms and conditions of the Insurance Policy, including the exclusion clauses, contained therein. However, in the instant case, the Opposite Party, as stated above, failed to prove that the terms and conditions of the Insurance Policy were supplied to the insured or the complainants, being the legal heirs of the insured. In United India Insurance Co. Ltd. & Anr. Vs S.M.S. Tele Communications & Anr.III(2009)CPJ 246(NC), it was observed that being aware of the existence of the policy, is one thing, and being aware of the contents and meaning of the clauses of the policy, is another. In the instant case, it is not the case of the Insurance Company that the insured or the complainants were made known of the meaning of the terms and conditions of the Insurance Policy.  No affidavit, by way of evidence, of the Insurance Advisor or the Agent was placed on record that the insured (now deceased), at the time, when she was alive, was explained the meaning of all the terms and conditions of the Insurance Policy and its exclusion Clauses. The principle of law, laid down, in the aforesaid cases, is fully applicable to the facts of the instant case. Since the terms and conditions of the Policy were not supplied to the insured, nor the terms and conditions thereof, were explained to her, nor the exclusion clauses were made known to her, there was deficiency, in rendering service, on the part of the Opposite Party. The District Forum was also right, in holding so.

13.           The Counsel for the Opposite Party, placed reliance on United India Insurance Co. Ltd.Vs Subhash Chandra, Revision Petition No.469 of 2006 decided on 19.5.2010 and Gas Ghar Vs Oriental Insurance Co. Ltd. Revision Petition No.2882 of 2005 decided on 23.2.2006 by the National Consumer Disputes Redressal Commission, in support of his contention that had the terms and conditions of the Policy, been not supplied by the Insurance Company, the insured would not have remained silent. He further submitted that, in that event, she was required to write to the Insurance Company to supply her the same.  No  doubt, in the cases, relied upon, by the Counsel for the Opposite Party, it was observed that it was expected of the insured, to ascertain the terms and conditions of the Insurance Policy, before signing the proposal form, yet, it can be said that those cases were decided on the peculiar facts, prevailing therein. In the instant case, the Travel Care Insurance Policy was taken on 15.04.2011, for the period from 22.04.2011 to 20.06.2011 and the insured died on 28.04.2011 i.e. within 6 days, from the date of commencement of the same. There was, therefore, no occasion on the part of the insured, as, in the meantime, she went to United States of America (U.S.A.), to ask for the supply of terms and conditions of the Insurance Policy, aforesaid.  Even otherwise, as stated above, it was the duty of the Insurance Company (Opposite Party), to supply the terms and conditions of the Insurance Policy, as per Regulation  3 of the Insurance Regulatory and Development Authority(Protection of Policy Holders’ Interests) Regulations,2002, framed by the Insurance Regulatory and Development Authority (IRDA). In paragraph number 7 of M/s Modern Insulators Ltd.’s case (supra), it was recorded that the National Consumer Disputes Redressal Commission observed that it was equally the responsibility of the respondent, to call for these terms and conditions, even if, the same were not sent by the appellant, as alleged, to understand the extent of risks covered under the Policy and the associated aspects. However, the Hon’ble Supreme Court, in paragraph number 9 held that the view expressed by the National Consumer Disputes Redressal Commission, was not correct. In other words, the Hon’ble Supreme Court did not approve of the view, taken by the National Consumer Disputes Redressal Commission, that it was the responsibility of the insured to call for the terms and conditions of the Policy, if the same had not been supplied to her, by the Insurance Company.  In view of the principle of law, laid down in M/s Modern Insulators Ltd.”s case (supra), decided by the Hon’ble Supreme Court, any  principle of law, laid down to the contrary, in the cases, relied upon by the Counsel for the appellant/Opposite Party, shall not hold the field. In this view of the matter, the submission of the Counsel for the appellant, being devoid of merit, must fail, and the same stands rejected.

14.           The next question, that falls for consideration, is, as to whether, in the absence of supply of the terms and condition of the Insurance Policy, the exclusion Clauses and warranties, contained therein, to the insured, by the Opposite Party, it could invoke the same for the purpose of repudiation of the claim of the insured, lodged by complainant no.1, or not. Undoubtedly, in answer to the questions, in the proposal form, as to whether, she (insured) was suffering from any diseases, or was under medications, for any disease(s), she had stated as not applicable “N.A.”. No doubt, the insured was suffering from asthma, depression and hypothyroidism, as is evident from the Investigation Report Annexure C-3, submitted by the complainants. Her death was, however, natural, as is evident, from the Autopsy Protocol, Annexure C-5 dated 13.05.2011, produced by the complainants. The exclusion Clauses, contained in the terms and conditions of the Insurance Policy, could only be invoked, by the Opposite Party, had the same been supplied to the insured and made known to her in explicit terms, at the time, the proposal form was filled in and signed by her, when she was alive.  Since, at the time of filling in and signing the proposal form, she was not made known of the exclusion Clauses, contained in the terms and conditions of the Insurance Policy, later on, as stated above, in the absence of supply of the terms and conditions, the Opposite Party could not invoke the same for repudiation of the claim of the insured, lodged by complainant no.1. Under these circumstances, neither the insured could be taken by surprise, nor the complainants, who are the legal heirs of the insured (deceased), could be denied the benefits, under the Insurance Policy, on the ground, that at the time of filling in and signing the proposal form, wrong answers, with regard to the pre-existing diseases were given by the insured. No help, therefore, could be drawn by the Counsel for the appellant/Opposite Party, from the terms and conditions of the Insurance Policy-Annexure R-1, placed on the record, at the time of production of evidence, for repudiating the claim of the insured (deceased), lodged by complainant no.1, being her legal heir. The Opposite Party, was, thus, clearly deficient, in rendering service, as also indulged into unfair trade practice, by illegally repudiating the valid claim of the insured (now deceased), lodged by complainant no.1.

15.           No other point, was urged, by the Counsel for the parties.

16.           In view of the above discussion, it is held that the order passed by the District Forum, being based on the correct appreciation of evidence, and law, on the point, does not suffer from any illegality or perversity, warranting the interference of this Commission.

17.           For the reasons recorded above, the appeal, being devoid of merit, must fail, and the same is dismissed with no order as to costs. The order of the District Forum is upheld.

18.           Certified copies of this order, be sent to the parties, free of charge.

19.           The file be consigned to Record Room, after completion.

Pronounced.

November 1, 2012

Sd/-

[JUSTICE SHAM SUNDER (RETD.)]

PRESIDENT

Sd/-

[NEENA SANDHU]

MEMBER

Rg