SHRI SWAPAN KUMAR MAHANTY, PRESIDENT

This is an application u/s.12 of the C.P. Act, 1986.

Facts, in brief; relevant to decide this consumer complaints are that the complainant took a Medilclaim Policy for himself and his family members for a sum insured of Rs. 5,00,000/- from OP-1 Religare Health Insurance Co. Ltd. Complainant paid premium from time to time and during the subsistence of the policy for the period from 18.08.2015  to 17.08.2016 the wife of the complainant was admitted to AMRI Hospital for Remicade Therapy. The OP-1 denied the request of the complainant for cashless treatment on the ground of pre-existing disease. Complainant renewed the policy by paying premium and the policy was valid till 11.09.2017. Further allegation of the complainant is that the OPs 1 to 3 arbitrarily cancelled the policy for non-disclosure of material facts. There is deficiency of service and unfair trade practice on the part of the OPs 1 to 3. Finding no other alternative, complainant has filed the instant consumer complaint praying for direction upon the OPs 1 to 3 to renew the Medilclaim Policy No. 10364121 dated 18.08.2015 along with compensation of Rs. 16,00,000/- and litigation cost of Rs.50,000/-.

The OPs 1 to 3 have contested the case by filing W.V. denying all the material allegations of the complainant. The specific case of the answering OPs is that the complainant had taken a Insurance Policy (CARE) being No. 10364121 for the period from 18.08.2015 to 17.08.2016 and again renewed the said policy for the period from 11.09.2016 to 10.09.2017 and the sum of insured was Rs. 5,00,000/- subject to the terms and conditions of the policy. During the subsistence of the policy complainant approached the answering OPs with cashless facility for his planned hospitalization at AMRI Hospital, Salt Lake for the next dose of Remicade which is given for the treatment of crohn’s disease. In course of investigation of cashless claim the answering OPs collected discharge summary of AMRI Hospital, certificate of Dr. Sujit Chaudhari, consultation sheet of patient Sharmistha Daw and found that patient has a history of crohn’s disease since July, 2015 i.e. prior to inception of the policy. Complainant had deliberately concealed the fact of crohn’s disease. Thus, the answering OPs denied the claim of the complainant for non-disclosure of material information and cancelled the policy in terms of clause 6.1 and 6.13 of the policy documents. Accordingly, the answering OPs have prayed for dismissal of the case.

The OP-4 has also contested the case by filing W.V. contending inter-alia that they are the authorized agent of OP-1 Regliagare Health Insurance Co. Any dispute arising out of the Medilclaim policy is the sole liability of the OP-1. There is no deficiency in service and/ or unfair trade practice on the part of the answering OP. Accordingly, the OP-4 has prayed for dismissal of the case. Except filing W.V. OP-4 did not participate in the proceedings and file any E/chief in the form of affidavit.

Decision with Reasons

Both the parties have tendered evidence through affidavit. They have also given reply against the questionnaire set forth by their adversaries. Both parties have also filed BNA.

We have examined the evidence and material on record and also given a thoughtful consideration to the argument advanced by the Ld. Advocate for the parties.

Admittedly, the complainant had taken a Insurance Policy (CARE) being No. 10364121 for himself and his family members for the period from 18.08.2015 to 17.08.2016  from the OP-1 and again renewed the said policy on 11.06.2016. There is also no dispute that the sum of insured was Rs. 5,00,000/- subject to the terms and conditions of the policy. Policy was issued against submission of proposal form duly filled in and signed by the complainant. Under the terms and conditions of the said policy, it is the duty of the proposer to give correct answers to all the questions, in the proposal form with regard to state of health, as the contract of insurance, unlike other contracts, is based on “utmost good faith”, and in the event of any false statement or concealment of material facts, by the proposer, the same is rendered, null and void, ab-inition. The sole responsibility of filling complete proposal form, is on the proposer. It is also the responsibility of the proposer to read and understand the forms, before signing the same.

Undoubtedly, the complainant applied for cashless facility request dated 02.03.2016 for hospitalization of his wife at AMRI Hospital Salt Lake for next dose of Remicade which is given for the treatment of crohn’s disease from 07.03.2016 and on investigation the Insurer found that the patient has a history of crohn’s disease since July, 2015 i.e. prior to inception of the insurance policy. Thus, the insurer cancelled the policy in terms of clause 6.1 and 6.13 of the policy document.

The core question for consideration is whether the fact that at the time of taking out the Medilclaim Policy, the wife of the policy holder was suffering from crohn’s disease was a material fact and, therefore, on account of non-disclosure of this fact in the proposal form, the insurer was justified in law in repudiating cashless request of the complainant and cancelled the policy?

Having bestowed our anxious consideration to the matter, we are of the opinion that in the light of the material on record, answer to the question posed has to be in the affirmative. A Medilclaim policy is a non-life insurance policy meant to assure the policy holder in respect of certain expenses pertaining to injury, accidents or hospitalizations. Nonetheless, it is a contract of insurance falling in the category of contract uberrima fides, meaning a contract of utmost good faith on the part of the assured. Thus, it needs little emphasis that when an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge. It is not for the proposer to determine. Whether the information sought for is material for the purpose of the policy or not. In United India Insurance Co. Ltd. vs. M.K.J. Corporation reported in (1996) 6 SCC 428 the Hon’ble Supreme Court has observed that it is a fundamental principle of insurance law that utmost faith must be observed by the contracting parties.

The wife of the complainant having a history of crohn’s disease prior to the inception of the policy and the complainant concealed such fact in the proposal form. The OPs 1 to 3 denied the claim of the complainant vide letter dated 20.10.2016 under Clause 6.1 of the policy terms and conditions for non-disclosure of material information.

The next question for consideration is whether factum of the said illness is a material fact for the purpose of a Medilclaim policy and its non disclosure is tantamount to suppression of material facts enabling the Insurance Company to repudiate is liability and/or cancel the policy.

The term “material fact” is not defined in the Act, and, therefore, it has been understood and explained by the court’s in general terms to mean as any fact which would influence the judgment of a prudent insurer in fixing the premium or determining whether he would like to accept the risk. Any fact which goes to the root of the Contract of Insurance and has a bearing on the risk involved would be “material”.

As stated in Pallock and Mulla’s Indian Contract and Specific Relief Acts “any fact the knowledge or ignorance of which would materially influence an insurer in making the contract or in estimating the decree and character of risks in fixing the rate of premium is a material fact.”

In this regard, it would be apposite to make a reference to Regulation 2 (1) (d) of the Insurance Regulatory and Development Authority (Protection of Policyholder’s Interests) Regulations, 2002, which explains the meaning of term “material”. The Regulation reads thus:-

“Definitions:- In these regulations, unless the context otherwise requires,-

a) xxx xxx xxx

b) xxx xxx xxx

c) xxx xxx xxx

d) ”Proposal Form”; means a form to be filled in by the proposer for insurance, for furnishing all material information required by the insurer in respect of a risk, in order to enable the insurer to decide whether to accept or decline to undertake the risk, and in the event of acceptance of the risk, to determine the rates, terms and conditions the rates, terms and conditions of a cover to be granted”.

For the purpose of these regulations shall mean and include all important, essential and relevant information in the context of under writing the risk to be covered by the insurer & quot. Thus, the regulation also defines the word & “material” to mean and include all “important”; & “essential”; and “relevant”; information in the context of guiding the insurer to decide whether to undertake the risk or not.

The Upshot of the entire discussion is that in a Contract of Insurance, any fact which would influence the mind of a prudent insurer in deciding whether to accept or not to accept the risk is a “material fact”. If the proposer has knowledge of such fact, he is obliged to disclose it particularly while answering questions in the proposal form. Needless to emphasis that any inaccurate answer will entitle the insurer to repudiate his liability because there is clear presumption that any information sought form is material for the purpose of entering into a Contract of Insurance.

Having given our anxious consideration to the material on record, we are of the opinion that the answers given by the complainant in the proposal form are untrue to his knowledge. There is clear suppression of material facts in regard to the health of the wife of the complainant. The statements made in the proposal form are untrue and incorrect, falling foul of the clause 6.1 of the policy document. We are, therefore, of the opinion that the Insurance Company is justified in repudiating the claim and cancelling the policy as per clause 6.1 and 6.13 of the policy document. Thus, there is no negligence and deficiency in service on the part of the OPs 1 to 3.

In view of the foregoing discussion, we are convinced to hold that the complainant is not entitled to get any benefit as claim when repudiation and cancellation of policy under clause 6.13 of the policy document.

In the result, the case fails.

Hence,

Ordered

            That the complaint case be and the same is dismissed on contest against the OPs 1 to 3 and also dismissed ex parte against the OP-4.

            No cost is imposed upon any of the parties.