Before the District Consumer Dispute Redressal Commission [Central District] - VIII, 5th Floor Maharana Pratap ISBT Building, Kashmere Gate, Delhi

                               Complaint Case No. 109/22.04.2015

C1- Yashpal Gulati s/o Chaman Lal Gulati

C2- Mrs. Prakash Kumar Gulati w/o Sh. Yashpal Gulati

Both resident of : FA-131, Mansarover Garden,

New Delhi-110015                                                                            …Complainant

                                      Versus

Oriental Insurance Co. Ltd.

Having its Head Office at : A-25/27, Asaf Ali Road,

New Delhi-110002

Also at : 215, Rama Market, Pitampura,
New Delhi -110035                                                                 ...Opposite Party

                                                                   Date of filing:            22.04.2015

Coram:                                                       Date of Order:           13.06.2024

Shri Inder Jeet Singh, President

Ms Rashmi Bansal, Member -Female

                                             ORDER

Ms Rashmi Bansal, Member

The present complaint is filed by the complainants against OP alleging deficiency in services on its part in repudiating their insurance claim that has caused them trouble, harassment and mental agony besides financial loss.

1. Complainants case.
   1. It is the case of the complainantno.1 that he has been purchasing insurance policy for himself and his wife, complainants no. 2 from Insurance companies without any break since 2006 and has been paying insurance premium regularly. The first mediclaim insurance policy was for a sum of Rs.2,00,000/- from IFFCO Tokyo, valid from 15.11.2006 to 14.11.2007.For the next policy, valid for a period from 15,11.2007 to 14.11.2008, the company was changed to National Insurance Company. Complainants submit that they came to know that the OP company is converting mediclaim policy from other insurance company to its company with all available benefits of the existing policy i.e.  on renewal of policy of other insurance companies, where cumulative bonus is confirmed by the previous insurer, the insured were given the benefit of continuity and pre-existing disease clause to be applied retrospectively for the period for which the cumulative bonus had been allowed, however, no other discount will be given. Similarly, no benefit was allowed in fixation of sum, insured amount and waiver of difference of premium and a circular bearing number HO/DGM(T)/91/2006/CR – 6073 Dated 14.09.2006 was issued by OP to that effect. Complainants submit that bona - fidely believing the said notification they have converted their existing policy to the OP company. It is further submitted that at the time of changing the policy from National Insurance Co Ltd to the OP company, officials of the OP company, while accepting the proposal of the complainants, have clearly stated on the proposal form on 11.11.2008 as continued policy and also issued policy number 271901/48/2009/1792, valid from 15.11.2008 to 14.11.2009 by categorically making an endorsement on the policy cover note, that the policy is accepted, subject to realisation of payment, which has been admittedly made by the complainants. Since then complainants kept on renewing, the said policy from time to time as per following details:
      1. policy no. 271901/48/2009/1792 valid from 15.11.2008 to 14.11.2009;
      2. policy no. 271901/48/2010/1916 valid from 15.11.2009 to 13.11.2010;
      3. policy no. 271901/48/2011/2363 valid from 15.11.2010 to 14.11.2011;
      4. policy no. 271901/48/2012/2534 valid from 15.11.2011 to 14.11.2012.
   2. Complainant no. 1submits that complainant no. 2was hospitalised for treatment related to osteoarthritis bilateral knee and osteoporosis on 11.06.2012 to 19.06.2012 and a bill of Rs.4,00,000/- appx. was paid towards medical expenses. After discharge from hospital, the claim was filed with the OP for its reimbursement, but the same was repudiated by OP  by letter dated 04.08.2012 issued by TPA and thereafter by OP on 10.09.2012 on the ground that the claim falls under the exclusion clause 4.1 – waiting period of 4 years for age related osteoarthritis and osteoporosis from inception of 1^st policy. Since insurance with OP is in the fourth year, claim falls under exclusion clause no. 4.3 of the policy hence not payable. Complainants submit that the policy was issued by OP in continuation of the previous insured policy with all the benefits. The various written letters/reminders by complainants to OP remained unanswered. Therefore, a complaint before insurance ombudsman was made which was dismissed vide order dated 10.02.2015, received by complainants on 10.03.2015.The complainants submit that they have been suffering because of the illegal and arbitrary repudiation of their insurance claim and praying for direction to OP for the payment of insured amount,  expenses incurred by them besides compensation for suffering for mental harassment and physical harassment, travelling expenses etc due to unfair trade practice by the OP and litigation cost.

2. Upon notice, OP filed its reply, stating that no cause of action arose in favour of the complainants the complaint is liable to be dismissed. On merit, the issuance of the policy as stated by the complainants are admitted. It is submitted that the insurance policy with the OP was in the fourth year of running during which the claim occurred. The patient was admitted in the hospital but since the patient was having different policies during last four years, therefore, the claim was recommended for repudiation. The OP has relied upon the exclusion clause 4 with respect to pre-existing health condition or disease or ailment/injuries which are excluded up to 4 years from the inception of the policy for the first time. OP submits that for the purpose of applying this condition, the date of inception of this mediclaim policy taken from the OP has to be considered, provided the renewal has been continues and without any break in period. Therefore, they are not liable for the present claim and the claim of the complainants was closed as no claim. It is also submitted that there is no deficiency in service on its part and complainants are not entitled for any claim, compensation and the complaint is liable to be dismissed as all the terms and conditions of the insurance policy were made clear to the complainants at the time of giving policy.
3. Complainants filed rejoinder negating the contents of the written statement of the OP and has reiterated their version of the complaint in addition to the plea that they initially had policy for a sum insured for 2,00,000/- and kept renewed their policy for an amount of Rs.2,50,000/-  only for the last three renewal and from the date of hospitalisation and till date complainants are continuing their same policy with the OP and if there were any mala- fide  on their part  then they could enhance the policy amount at the time of renewal. But since there was no apprehension of any hospitalisation or ailment to the complainants, they continued with the policy as it was.
4. Both the parties have filed their evidences along with their respective documents in support of their case.
   1. In support of its case, complainants have filed  copy of the policy issued by IFFCO Tokyo for the period 15.11.2006 to 14.11.2007; copy of the policy issued by National Insurance Company for the period from 15.11.2007 to 14.11.2008, copy of circular dated 14.09.2006, proposal form and policy schedule colly; the copies of the policies issued by OP company bearing policy number 271901/48/2009/1792; 271901/48/2010/1916; 271901/48/2011/2363; 271901/48/2012/2534, copy of medical bill, copy of repudiation letter dated 04.08.2012 issued by TPA and 10.09.2012 by OP, copy of the letter (colly) written to OP; copy of letter dated 09.12.2014.; Copy of order dated 10.02.2015 by  Ombudsman.
   2. OP has filed circular dated 14.09.2006, ombudsman order dated 23.12.2014, repudiation letter dated 04.08.2012.
5. The Commission has heard the arguments from both the sides and perused the documents presented by both the sides.
   1. The policy in question is not disputed. The only question for determination is whether the said policies are in continuation of the old policy or individual new policy?
   2. Complainants in their evidence have mentioned that this has been clearly stated by the OP branch office on the proposal form on 11.11.2008, as continued policy and thereafter issued policy number 271901/48/2009/1792. The concerned document filed by the complainants are examined and it is noted that on the right-hand side of the proposal form it is hand written as period of insurance is 15.11.07 to 14.11.08 and below that, is written ‘continued policy’. The said note also mention ID attached for age-related proof, proposal accepted subject to its approval and signed by OP official on 11.11.2008.
   3. This is also observed by order dated 27.11.2019 that OP was directed to bring the original proposal form on the next date of hearing. However, the said order was never complied by OP1, in such event, the circumstances goes against OP as the said document is the material one, which was withheld by the OP1 vis a vis the copy of proposal form made available to the complainant  has been produced by him, which established the case of complainant.  OP has also not denied the photocopy of the said document as filed by the complainants, in the absence of which it is inferred that the said fact is admitted by the OP and the policy issued by National Insurance Company was accepted by OP in continuity along with all benefits and therefore, the bar of four years does not applicable to the present case.
   4. Since the copy of the proposal form filled by the complainants shows that it has been accepted by the OP with the remark made therein as mentioned above in their presence, leaves no doubt that the complainants have been represented as their policies are in continuation of the old policy. The further action for endorsement notes on the policy was the responsibility of the OP as the same is an administrative work to be done by OP itself and complainants had no role to play therein. If, no such endorsement has been made by the OP, then it is not the fault of the complainants as a man of ordinary prudence would take it as the continuation of the policy from National Insurance Company to the present OP without any doubt, especially when the note has been mentioned on the proposal form by OP reflecting continued policy as marked by the OP or his authorised officer.
   5. Both the parties have filed the circular number HO/DGM(T) 91/2006/CR – 6073 dated 14.09.2006 which vide its clause 12 states:

“On renewal of policies of other insurance companies where cumulative bonus is confirmed by the previous insurer, the insured will be given the benefit of continuity and pre-existing disease clause will be applied retrospectively for the period for which the cumulative bonus had been allowed. No other discount will however be given. Similarly, no benefit will be allowed in fixation of some insured and favour of difference of premium. Sum insured will be fixed as per the basic sum insured under the expiring/ending policy or as chosen by the insured.” , which leaves no iota of doubt that on benefit of continuity and pre-existing disease clause is applicable on complainants also.

1. The commission has also considered the directions issued by IRDA relating to policy portability, however, keeping in view that these rules are issued in 2011 and the present case pertains to prior to that.  Therefore, in the facts and circumstances of the case and the documents on record, this commission deems fit to hold that the policy taken from the OP bearing number 271901/48/2009/1792 for a period from 15.11.2008 to 14.11.2009 was in continuation of the old policy issued by NIC and which fact was effectively noted on the proposal form. The further policies issued by OP were followed in sequence one after another for which the complainants continuously paid the premium without any default. Therefore, the exclusion clause with respect to waiting period of 4 years for age related osteoarthritis and osteoporosis is not applicable in the present case. We also find force into the plea of the complainants that they kept on renewing their policy for an amount of Rs.2,50,000/- only for the last three renewal from the date of hospitalisation and till date and had there been any mala-fide on their part then they would enhance the policy amount at the time of renewal. Since there was no apprehension of any hospitalisation or ailment to the complainant no.2, therefore the question of concealment of the disease does not arise at all. Also, the circular number HO/DGM(T) 91/2006/CR – 6073 dated 14.09.2006, made it abundantly clear that the OP is under obligation to follow the said circular. By repudiating the legitimate claim of the complainants, OP has committed deficiency in service and is liable to pay the insured amount of Rs. 2,50,000/- to the complainants. Since the legitimate insured amount of complainants was retained by OP without any reasonable cause therefore, the same is liable to be awarded along with an interest @ 7.5% p.a. to the complainants Further, the complainants have suffered mental harassment and agony, physical and financial troubles therefore, they are also held entitled for compensation, which this Commission deems fit to be 15,000/- considering the declining of valid claim. Commission also deems fit to allow litigation cost of Rs. 10,000/- in favour of the complainants and against OP. The policy is for sum insured, amount of Rs. 2,50,000/- ,  but  the  bills placed on record by the complainants is of Rs. 4,19,898/-, however, the claim cannot be awarded exceeding the sum insured.
2. Therefore, the complaint is allowed in favour of the complainant and OP is directed to pay the insured amount of Rs. 2,50,000/- along with interest @7.5% p.a. w.e.f. 10.09.2012 to the complainant and  compensation of Rs. 15,000/- and litigation cost of Rs. 10,000/- within 30 days from the date of receipt of the order, failing which the insured amount of Rs. 2,50,000/- shall carry an interest @ 10% p.a. from 10.09.2012 till its actual realisation by the complainants besides compensation of Rs. 15,000/- and litigation cost of Rs. 10,000/-.

6. Announced on this 13th day of June 2024. Copy of this Order be sent/provided forthwith to the parties free of cost as per rules for compliances, besides to upload on the website of this Commission.