KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

VAZHUTHACAUD, THIRUVANANTHAPURAM

 APPEAL  No. 314/2018

JUDGMENT DATED: 01.06.2023

(Against the Order in C.C. 222/2017 of CDRC, Ernakulam)

PRESENT:

HON’BLE JUSTICE SRI. K. SURENDRA MOHAN     : PRESIDENT

SRI. RADHAKRISHNAN K.R.                                        : MEMBER

APPELLANT:

United India Insurance Co. Ltd., Hospital Road, Ernakulam, Kochi-682 011 represented by its Regional Manager.

                               (By Adv. T.J. Lakshmanan)

                             Vs.

RESPONDENT:

P.S. Peethambaran, S/o Surendran, Puthenpurayil, House No. 13/292, Thrikkakara, Kochi-21.

                (By Advs. T.K. Radhakrishnan & Chithra R. Shenoy )

JUDGMENT

SRI. RADHAKRISHNAN K.R.: MEMBER

This is an appeal filed under Sec. 15 and 17 of the Consumer Protection Act, 1986, by the opposite party in C.C. No. 222/2017 before the Consumer Disputes Redressal Commission, Ernakulam (District Commission for short).  As per the order dated 21.02.2018, the District Commission allowed the complaint and directed the opposite party to pay the claim amount of Rs. 1,20,000/- with interest @ 18% per annum from the date of claim i.e; from 28.06.2016 till realization.  The District Commission further directed the opposite party to pay Rs. 10,000/- as compensation and Rs. 5,000/- as costs to the complainant. 

2.  The pleadings of the complainant in brief are as follows:  The respondent/complainant had taken a ‘Family Medicare policy 2014’bearing policy No. 1002012814 P 111611948for a sum insured of Rs. 2,50,000/- for the period from 19.03.2015 to 18.03.2016.  The policy was renewed for another one year vide policy No. 1009042815 P 115340238 for the period from 19.03.2016 to 18.03.2017.  During the period of the second policy the complainant was hospitalized for treatment at Renai Medicity on 22.06.2016.  He underwent a surgery on 23.06.2016 for Vesical Calculus disease and was discharged on 28.06.2016. He was not given cashless service by the opposite party.  Thereafter he submitted a claim with the opposite party for reimbursement of the medical expenses of Rs. 1,20,000/-.   It was rejected by the opposite party for the reason that Vesical Calculus is not covered during the first two years of the policy as per exclusion clause 4.3.  Hence he filed the complaint claiming the hospital bill of Rs. 1,20,000/- with compensation and costs.

3.  Opposite party in their version admitted having issued the policy.  According to them, the claim can be paid only as per the terms and conditions of the policy issued by them.  The claim was rejected not on the ground that his illness was a pre-existing one, but it was repudiated as per exclusion clause 4.3 of the policy. Since the illness of the complaint, ‘Vesical Calculus’ is within two years continuous coverage of the policy, the opposite party is not liable to pay the claim.   This was communicated to the complainant on 17.07.2016.Thereafter he filed a complaint before the Insurance Ombudsman which was dismissed on 22.02.2017. As the claim is not admissible as per policy, they prayed for dismissal of the complaint.

4.  Evidence in this case consists of documentary evidence furnished by the complainant which were marked as Exts. A1 to A10.  Ext. B1 was marked on the side of the opposite party.  No oral evidence was adduced by either party.  On the basis of the evidence adduced, the District Commission passed the impugned order.  Aggrieved by the said order, the opposite party have filed this appeal. 

5.   Heard both sides and perused the records.

          The learned counsel for the appellants submitted that hospitalization of the respondent/complainant was during the exclusion period of two years as per clause 4.3 of the policy and hence they are not liable to pay the claim as per terms and conditions of the policy. Accordingly the claim was repudiated as per their letter dated 17.07.2016 (Ext A4).  The learned counsel also submitted that the Insurance Ombudsman, Kochi, dismissed the complaint of the respondent vide its order dated 22.02.2017 (Exbt. A10).  According to him, the District Commission should have considered the findings of the Insurance Ombudsman.  If the appellants have to pay the amount ordered by the District Commission it will be an unnecessary loss of public money.  The learned counsel argued that the repudiation of the claim is as per the policy condition and that there is no deficiency in service on the part of the opposite parties. Hence he prayed to allow the appeal by setting aside the order of the District Commission.

6.  The learned counsel for the respondent submitted that the terms/wordings of clause 4.3 used in the repudiation letter and the policy marked by the appellant/respondent are different.  As per clause 4.3 of the policy, the insured should have 24 months continuous coverage for getting claim in respect of any of the diseases stated in the said clause.  The respondent/complainant has renewed the policy for the second year and so he is having continuous cover for 24 months.  Hence he is eligible to get the claim amount. Refusing to give cashless service and subsequently repudiating a rightful claim amount to deficiency in service on the part of the appellants. He prayed for dismissing the appeal with costs.

7.  We have considered the submissions on both sides and carefully examined the records.  The appellant admitted having issued ‘Family Medicare policy’ to the respondent covering the period of hospitalization. The claim submitted by the respondent/complainant under this policy was repudiated as it is not payable as per exclusion 4.3 of the policy. According to the appellant, the complaint filed by the respondent before the Insurance Ombudsman, Kochi was dismissed. The respondent should not have approached the District Commission after the dismissal of the complaint by the Insurance Ombudsman.  The appellants submitted that the District Commission should have considered the observations in para 4 of the order dated 22.02.2017 of the Insurance Ombudsman (Exbt. A10) dismissing his complaint.  In this connection the following rules of the Insurance Ombudsman Rules are relevant here:

“16(2): If the recommendation of the Ombudsman is acceptable to the complainant, he shall send a communication in writing within 15 days of receipt of the recommendation, stating clearly that he accepts the settlement as full and final”

17(8): “The award of the Insurance Ombudsman shall be binding on the insurers…”

Thus the award of the Insurance Ombudsman is binding on the insurer whereas it is not so in the case of the complainant. The order of the Insurance Ombudsman is not binding on the complainant unless he agrees to the award passed by the ombudsman. There is no case that the respondent accepted the award in writing as per Rule 16(2). He has the option to reject the award and seek other legal remedies.  Thus Ombudsman’s award does not prejudice in any way, the complainant’s right to seek legal remedy against the action of the insurers complained against, as per normal process of law.  Moreover as per section 3 of the Consumer Protection Act, 1986 (corresponding section 100 of Consumer Protection Act, 2019), the reliefs available to the Consumer are in addition to and not in derogation of any other law for the time being in force.  The complainant has exercised this right and we do not find any illegality in filing the complaint before the District Commission despite a dismissal order by the Insurance Ombudsman.  Being a separate and independent proceeding, it was for the District Commission to decide whether to consider or accept any of the observations in the award.

8.  The learned Counsel for the appellant cited the following observations of the apex court in Export Credit Guarantee Corporation of India Ltd Vs M/s Garg Sons International (2013 KHC 4040):

“8. It is a settled legal proposition that while construing the terms of a contract of insurance, the words used therein must be given paramount importance, and it is not open to the court to add, delete or substitute any words. It is also well settled, that since upon issuance of an insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risks covered by the policy, its terms have to be strictly construed in order to determine the extent of the liability of the insurer. Therefore, the endeavour of the court should always be to interpret the words used in the contract in the manner that will best express the intention of the parties”.

“9.  ……..the terms of the contract have to be construed strictly, without altering the nature of the contract as the same may affect the interests of the parties adversely. The clauses of an insurance policy have to be read as they are. Consequently, the terms of the insurance policy, that fix the responsibility of the insurance company must also be read strictly.   ……..”

9.  We agree to the contention of the learned counsel for the appellant that the court has no authority to add, delete or substitute any words in the contract of insurance. However, the last portion of the above referred observations (para 8) clearly state that “the endeavour of the court should always be to interpret the words used in the contract in the manner that will best express the intention of the parties”. This is a case in which the wordings of exclusion clause 4.3 quoted in the repudiation letter dated 17.07.2016 (Ext A4) issued by the appellant and exclusion clause 4.3 in the Ext A1/B1 policy issued by the appellant are different.  Hence context in this case is different and we are required to examine whether exclusion clause 4.3 can be applied to this claim or not.

10.  As already discussed, crucial point in this case is whether clause 4.3 is applicable to the claim of the respondent so that the appellant is absolved from liability as per the policy.  The wordings in clause 4.3 as per Ext. A4 repudiation letter dated 17.07.2016 are as under:

“4.3 During the first two years of policy, the expenses on treatment of diseases such as cataract, Benign Prostatic Hyperthrophy, Hysterectomy for Menorrhagia or Fibromyoma, Hernia, Hydrocele, Congenital Internal disease, Fistula in Anus, Piles, Sinusitis and related disorders, gallbladder stone removal, Gout & Rheumatism, Calculus Diseases are not payable”.(Emphasis supplied)

11.  We agree that hospitalisation expenses for treatment of calculus disease is not payable as per the above clause as the claim has arisen within the waiting period of two years. However, there is a difference in the wordings of exclusion  clause 4.3in Ext. A1/B1 policy issued to the respondent, which states that:

 “4.3 Unless the insured has 24 months of continuous coverage, the expenses on treatment of diseases such as Cataract, Benign Prostatic Hyperthrophy, Hysterectomy for Menorrhagia or Fibromyoma, Hernia, Hydrocele, Congenital Internal disease, Fistula in Anus, Piles, Sinusitis and related disorders, gallbladder stone removal, Gout & Rheumatism, Calculus Diseases are not payable”.  (Emphasis supplied).

12.  On a plain reading of the clauses we observe that the wordings are different at the beginning of the clause only. The words “During the first two years of policy” are substituted by the words “Unless the insured has 24 months of continuous coverage”. There is no change in other terms of the clauses. Evidently the clause applicable in the claim is the one attached to the policy and not the one stated in the repudiation letter. It appears that exclusion clause 4.3 stated in the repudiation letter was revised subsequently. The printing date of Ext A1 policy with the revised clause 4.3 is seen as 14.03.2016. The repudiation letter (Ext A4 ) quoting the earlier clause is sent on 17.07.2016. It is surprising that the official who issued the repudiation letter was not aware of the actual clause attached to the policy issued to the insured three months ago. Such casual approach adversely affects rightful claims of the policy holders.

13.  Change in the wordings itself proves that different interpretation is intended by the contracting parties. The words “during the first two years” are conspicuously substituted by the words “unless the insured has 24 months of continuous coverage”. The learned counsel for the respondent argued that, ‘elapse of 24 months’ is not stated anywhere in the clause. It only states that the insured should have 24 months of continuous coverage. Nowhere it is stated that the claim for diseases specified in clause 4.3 will be payable only after continuous coverage of 24 months. According to the counsel, on renewing the policy he is having insurance coverage for next 12 months, making the total period of coverage to 24 months from the date of inception on 19.03.2015. The contention of the respondent/complainant is that he has satisfied the requirement of continuous coverage of 24 months as the second policy is a continuous renewal and it is valid up to 18.03.2017. There is nothing in the policy or in evidence to prove that there is a waiting period of 24 months and the ailment for which the respondent was treated will be covered only after 24 months. Appellant/opposite party failed to prove that exclusion clause 4.3 is applicable in the claim.  We agree to the contention that exclusion clause 4.3 is not applicable in the claim submitted by the respondent and conclude that the appellant is liable to pay the claim as per policy.

14.  On the basis of the foregoing discussions, we do not find any error in the finding of the District Commission that the appellants / opposite parties could not prove their contention that the claim comes within the exclusion clause 4.3 of the policy. There is no valid ground to interfere with the order of the District Commission and hence we concur with their finding that there is deficiency in service on the part of the appellants/opposite parties.    However, we are of the view that the interest of 18% awarded by the District Commission on the claim amount of Rs.120,000 /- is on the  higher side.  Hence we reduce the same to 9 % interest per annum. So the order passed by the District Commission is to be modified to that effect.  Hence the order of the District Commission is modified to the extent that the interest on the said amount of Rs 120,000/- is reduced from 18% to 9%. 

In the result, the appeal is partly allowed and the order dated 21.02.2018 in C.C. No. 222/2017 of the District Commission is modified by reducing the interest on the claim amount of Rs. 120,000/- from 28.06.2016 from 18% to 9% per annum.  In all other aspects the order passed by the District commission will remain/stand intact. The opposite party shall also pay Rs. 5,000/- as costs to the respondent/complainant.

            The appellant has deposited an amount of Rs. 25,000/- towards statutory deposit at the time of filing the appeal.  The respondent/complainant is permitted to obtain release of the said amount on filing proper application.  The balance amount due  as per the order of the District Commission as modified above, shall be paid by the appellant/ opposite party within one  month from the date of receipt of a copy of this order failing which the respondent / complainant is at liberty to  initiate appropriate  proceedings for executing the order. 

JUSTICE K. SURENDRA MOHAN  : PRESIDENT

                                                                                                         RADHAKRISHNAN K.R.  : MEMBER

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