1.      The present First Appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (“the Act”) against the Order dated 13.03.2019 passed by the State Consumer Disputes Redressal Commission, Punjab at Chandigarh (“the State Commission”), in Consumer Complaint No. 650 of 2018, wherein the Complaint filed by the Complainant (Respondent No. 1 herein) was allowed.

2.      For clarity, the parties involved in this matter are referred to as mentioned in the Complaint before the State Commission. “Sohan Singh” identified as Complainant ("Respondent No. 1"), who is the nominee of his son Sarabjit Singh (Since Deceased or DLA for short). Conversely, Dewan Housing Finance Corporation Ltd. (DHFL), represented by its Managing Director in Mumbai, is denoted as OP-1 (Respondent No. 2 Proforma party herein). DHFL, managed by its Manager in Pathankot, is denoted as OP-2, DHFL Pramerica Life Insurance Company Ltd., represented by its Manager, and Managing Director is referred to as OP-3 and OP-4 respectively.

3.      Brief facts of the case, as per the Complainant, are that Sarabjit Singh, the son of the Complainant (now deceased/DLA), had obtained a housing loan from OP Nos.1&2, with loan account No.16500002721, for construction of a house on his property at VPO Ghot Pokhar Tehsil and District Gurdaspur. OP Nos.1 and 2 disbursed Rs.21,72,206/- as the loan amount to Sarabjit Singh, with repayment scheduled over 228 months through monthly installments of Rs.21,455/-. This home loan was insured under DHFL Pramerica Group Credit Life policy by OP Nos.3&4, the sister concerns of OP-1&2, commencing on 30.04.2017 and maturity date of 29.04.2036, providing total sum assured of Rs.21,72,207/-. Sarabjit Singh, the insured, paid Rs.2,19,927.27 as a lump sum premium for the policy and designated his father, Complainant Sohan Singh, as the nominee. The DLA, who was in good health and employed with the Punjab Police, died on 06.08.2017 due to heart attack, as confirmed by DDR No.014 dated 06.08.2017. There was no prior history of disease or ongoing treatment. Despite DLA demise, the Complainant continued to make loan installments to OP Nos.1 & 2. He subsequently filed a claim with OP Nos.3 & 4, who vide letter dated 15.12.2017, denied the claim alleging non-disclosure of pre-existing medical conditions, specifically seizure disorder and diabetes mellitus. However, the postmortem of the DLA that was conducted at Civil Hospital Gurdaspur on 06.08.2017 concluded that the cause of death was ‘Myocardial Infarction’ leading to a massive heart attack, a natural disease process. He contended that repudiation of the claim by OP Nos.3 & 4 constitutes deficiency in service and unfair trade practice.

4.      Being aggrieved, the Complainant filed CC No. 650/2018 before the learned State Commission and sought relief by directing OPs No. 3 & 4 to pay the full insured amount of Rs.21,72,207/- along with interest @ 18% per annum from the date of DLA’s death, Rs.1 lakh as compensation for mental harassment, and Rs.10,000/- as costs.

5.      In their joint reply, OP-1&2 contested the complaint and asserted that OP-1&2 are distinct entities from OP-3&4, operating in separate fields. OP-1&2 claimed no involvement in the repudiated claim by OP-3&4, emphasizing their role solely as a housing finance company and that they are not in the insurance business. They refuted any claim of master agent relationship between them and OP-3&4. On the merits, OP-1&2 acknowledged that the son of the Complainant was granted home loan and his subsequent insurance with OP-3&4 but they denied any affiliation between the two sets of entities. They further denied pressurizing the Complainant to continue paying EMIs following the death of his son on 06.08.2017. Asserting that the matter regarding the insurance claim solely concerns the Complainant and OP-3&4, OP-1&2 prayed for dismissal of the complaint, refuting any claim of deficiency in their service.

6.      In their separate replies, OP-3&4 vehemently contested the complaint, dismissing the allegations as baseless. They admitted that Sarabjit Singh, the son of the Complainant, had obtained a housing loan from OP-1&2 in April 2017 for house construction, with the loan linked to a life insurance policy. Sarabjit Singh, the insured, paid an additional premium of Rs.2,19,927.27 as a one-time premium to cover the loan amount, with the Complainant nominated as the beneficiary. However, it was asserted that Sarabjit Singh, in the proposal form, falsely denied suffering from diabetes despite a medical history of hypoglycemia, R. Sinusitis, seizure disorders, and diabetes mellitus. The insurance policy was issued without a prior medical examination based solely on the information provided by him. Due to his misleading statements regarding his health, OP-3&4 argued that the insurance contract is voidable due to his lack of good faith. An investigation report revealed Sarabjit Singh's pre-existing conditions of seizures and diabetes mellitus, which were deliberately concealed by him. OP-3&4 contested other allegations made by the complainant, primarily emphasizing that the policy is voidable due to Sarabjit Singh's concealment of pre-existing conditions, thus justifying the repudiation of the claim. Accordingly, OP-3&4 prayed for the dismissal of the complaint, asserting the validity of their decision to repudiate the claim.

7.  The learned State Commission vide order dated 13.03.2019 partly allowed the complaint with the following Order:-

“6.  Even otherwise, we are strictly bound by the terms and conditions of the contract of insurance Annexure R-3 entered into between the parties in this case. The case as projected by OPs does not fall under the exclusion clause as stipulated by OPs in the contract of insurance. In this view of the matter, we are unable to rely upon the above referred photostat copies of the alleged medical record without any proof of its authenticity in the absence of affidavit of investigator and affidavit of the concerned doctor on the record. Consequently, it is held that OPs could not substantiate this point that DLA suffered from pre-existing ailments and it was covered under exclusion clause of the policy.

7. As a result of our above discussion, we accept the complaint of the complainant and direct OP nos.3 and 4 to make the payment of entire assured amount of Rs.21,72,207/- with interest @7% per annum to OP nos.1 and 2 Bank for repayment of the loan amount from the date of repudiation of the claim. The amount which remained with OP nos.1 and 2 bank after adjustment of entire loan amount shall be paid to complainant, being nominee and father of Sarbjit Singh DLA by OP nos.1 and 2 bank. We further award composite amount of compensation of Rs.60,000/- to complainant for mental harassment and litigation expenses payable by OP nos.3 and 4 to him. The above amounts shall be payable within 45 days from the date of receipt of certified copies of this order.”

8.      Being aggrieved by the impugned order, OP-4 (Appellant herein) has filed this present Appeal no. 863 of 2019 with the following prayer:

“(a)  allow the present Appeal;

(b) Set-aside the Impugned Order dated 13.03.2019 passed in Consumer Complaint No.650 of 2018 by State Consumer Dispute Redressal Commission, Punjab, Chandigarh and dismiss the complaint; and

(c) pass any other order/direction as this Hon'ble Commission deem fit and proper circumstances of the case.”

9.      In the Appeal, the Appellant raised following main issues:

1. The State Commission failed to acknowledge crucial facts stated by the Appellant, specifically regarding medical records of the Life Assured. These records, including hospital discharge summaries and medical certificates, indicate a history of seizure disorder, diabetes mellitus etc predating the application for insurance.
2. The medical documents and investigation agency report filed before the State Commission were not contested by Respondent No. 1 during the proceedings. Therefore, these documents should be considered as proven and unchallenged evidence.
3. The State Commission erred in suggesting that the Appellant should have obtained the medical records through the RTI route or directly from nursing home under the Indian Medical Council (Professional Conduct and Ethics) Regulations, 2002. However, the said medical documents were obtained by the investigation agency during its inquiry and were presented before the State Commission without challenge to their authenticity.
4. The fundamental principle of utmost good faith governing the insurance contracts was violated as the Life Assured failed to disclose his complete medical history, including the existing seizure disorder, diabetes mellitus etc, rendering the insurance contract invalid and unenforceable.

10.    Upon being served notice of Appeal, Respondent No. 1 has submitted written synopsis and reiterated the case's facts and contentions. Notably, during the arguments, the learned counsel for the Appellant stated that Respondent No. 2 is merely a proforma party and thus holds no liability in the case.

11.    The learned Counsel for the Appellant reiterated the grounds stated in the Appeal and asserted that during the investigation of the claim, it was revealed that the Deceased Life Assured (DLA) had a history of alcoholism, HCV, stomach problems, and was diagnosed with DNS with ITH with R. Sinusitis on 22.12.2012. Additionally, the DLA had a documented history of seizure disorder and diabetes mellitus prior to the submission of the proposal form, as evidenced by medical certificates issued in the year 2014 and treatment received in Amritsar and Gurdaspur. The DLA was not subjected to any medical examination before the issuance of the subject policy. The learned counsel emphasized that Respondent No. 1, during the proceedings before the State Commission, did not challenge the medical documents placed on record by the Appellant, demonstrating the DLA's past medical history. As such, these documents remained unrebutted and uncontroverted. Therefore, it was asserted that the strict provisions of the Evidence Act do not apply to Consumer Proceedings.

12.    The learned Counsel for the Appellant further argued that the DLA failed to adhere to the principle of utmost good faith at the time of obtaining the subject insurance policy and he cited the precedents of the Hon’ble Supreme Court in Life Insurance Corporation of India Vs. Smt. GM Channa Basamma (1991) 1 SCC 357) and Satwant Kaur Sandhu Vs. New India Assurance Company Ltd. (2009) 8 SCC 316). These judgments underscored that an insurance contract is a contract uberrimafide, and there exists an obligation of complete good faith on the part of the assured to disclose all material facts relevant for the insurer's consideration during the proposal stage. Hence, the Counsel prayed for the allowance of this Appeal, setting aside the impugned order, and dismissing the complaint.

13.    The learned Counsel for Respondent No. 1/ Complainant vehemently argued that the Appellant's rejection of the claim lacks substantiation due to the absence of any affidavit from the investigator who collected the photocopies of the medical records. There is no affidavit from the treating doctor at Hartej Maternity and Nursing Home, Amritsar, to verify the authenticity of the medical records. Mere photocopies of medical records hold no legal weight without proper certification. He further pointed out that no RTI or other Application was filed by the Appellant to officially obtain these records. The onus of proving that the Insured had pre-existing ailments at the time of insurance, and that these ailments were excluded by the policy clause, lies with the Appellant. However, no evidence was presented by the Appellant in this regard. Consequently, the Appellant is obligated to pay the insurance amount to Respondent No. 1 according to the terms and conditions of the insurance policy. He sought the present appeal to be dismissed, with exemplary costs.

14.    I have examined the pleadings and associated the documents placed on record and rendered thoughtful consideration to the arguments advanced by the learned Counsel for both the Parties.

15.    The primary issue is the validity of the insurance claim made by the Complainant (Respondent No. 1) against the Appellant. The dispute centers on whether the insurance contract between the parties is enforceable, given the alleged non-disclosure of pre-existing medical conditions by the DLA at the time of obtaining the policy? The Appellant contended that the DLA failed to disclose crucial information regarding his medical history, including seizure and diabetes mellitus, rendering the insurance policy voidable. Whereas the Respondent No. 1 argued that Appellant failed to substantiate the claim of pre-existing ailments and that he is entitled for the claim. Thus, the primary issue to be determined is the validity of the insurance contract and whether the Appellant is liable to pay the insurance amount to the Complainant.

16.    The Postmortem Examination Report dated 06.08.2017 of the DLA issued by Civil Hospital Gurdaspur reveals that the death was due to ‘Myocardial Infraction’ leading to heart attack in ordinary course of the natural disease process. The relevant portion of the PM Report reads as under: -

“OPINION

Cause of Death

IN MY OPINION CAUSE OF DEATH IN THIS CASE IS MYOCARDIAL INFRACTION LEADING TO MASSIVE HEART ATTACK WHICH IS SUFFICIENT TO CAUSE DEATH IN ORDINARY COURSE OF NATURE AND IS NATURAL DISEASE PROCESS.”

17.    The Complainant argued that no affidavit was filed by the doctor who treated at Hartej Maternity and Nursing Home, Amritsar to verify the authenticity of medical records. Moreover, mere photocopies of medical records hold no legal weight, without proper certification. On the other hand, the Appellant repudiated the Claim vide letter dated 15.12.2017 on the ground that the DLA had history of Seizure Disorder and diabetes mellitus even prior to the date of application and this information was not disclosed by him in the proposal form and at the time of filling up the proposal form, medical questionnaires were fielded to him, but he replied them in the negative with regard to above diseases. The relevant portion of the proposal for reads as under:-

"1.Have you ever suffered or are currently suffering from

(a) Chest pain, or heart attack or any other heart disease   No

(b) Cancer, tumor, growth or cyst of any kind                              No

(c) Stroke, paralysis, epilepsy, any psychiatric/mental disorders of brain/nervous system or any kind of physical disabilities. No

(d) Asthma, tuberculosis or any other lung disorder. No (e)Disease or disorder of muscles, bones or joints, arthritis or blood disorder (anemia) thyroid disorder, or any endocrine disorder.                                                                                    No

(f) Disease or disorder of the kidney, digestive system (stomach, pancreas, gall bladder, intestines,) liver, hepatitis B or HIV/AIDS infection.                                                                                   No

(g) Diabetes                                                                           No

(h) High Blood Pressure                                                       No"

18.    It is uncontested that the son of the Complainant, Sarbjit Singh had obtained housing loan from OP-1 & 2 vide Application No. 01488522 for construction of House and OP-1 & 2 sanctioned and disbursed Rs. 21,72,206/-. The said loan was also insured against the life of Sarbjit Singh by OP-3 & 4. Sarabjit Singh died on 06.08.2017 due to Heart Attack and necessary procedures for Post Mortem and other associated procedures were taken. Thereafter, when the Complainant preferred the claim, the same is repudiated by the insured vide letter dated 15.12.2017 stating that the insured Sarabjit Singh was suffering from hypoglycemia, R. Sinusitis, seizure disorders, and diabetes mellitus etc prior to the date of application and this information was not disclosed in the said application. As against the repudiation, the Complainant filed CC No.650 of 2018 before the learned State Commission on 07.08.2018.

19.    It is the contention of the of the OPs that the said policy was issued to DLA without any prior medical examination based on the information provided by him with respect to his health, and he gave false information in the proposal form to the questionnaire given to him with regard to the state of his health. The contract of insurance is liable to be avoided, as the DLA intentionally failed to bring on record his medical history. The repudiation of insurance claim of the individual was due to concealment of his medical conditions and misleading the insurer and thus obtained the insurance policy.

20.    It is evident from the record that in the proposal form, the DLA had answered all the health-related questions in negative and stated that he does not suffer from any of the stated medical conditions. It is also a fact that that the insured suddenly died due to heart attack. In his affidavit the Complainant denied any pre-existing medical condition with respect to the insured. While repudiating the claim vide letter dated 15.12.2017, OP-3 and 4 did not bring out any evidence wrt the history and seizure disorder and Diabetes Mellitus suffered by the insured prior to the date of application other than certain photocopies of treatment/clinical information with respect to certain treatment the DLA had undergone. The same were not filed in the form of an affidavit of the investigator or the doctors or other staff who treated the DLA, so as to ascertain the factual accuracy of the same at any stage, thereby affording opportunity to the Complainant to rebut the same and render his version. The claim was repudiated by the Appellant and the same was challenged by the Complainant who is a nominee for the DLA. It was incumbent upon the insurer to bring on record specifically stating the scope of treatment and other associated medical aspects, if any, which are violative of the proposal performa and establish the same by leading evidence rather than merely filing photocopies of the certain clinical information alleged to have been taken by the DLA.

21.    In view of the above discussions, I am of the considered view that the well-reasoned order passed by the learned State Commission, Punjab at Chandigarh dated 20.03.2019 does not suffer any illegality or infirmity, except for award of compensation over and above award of interest element. Consequently, FA No. 863/2019 is Dismissed and the order of the learned State Commission is modified as under:

I.  The Opposite Party No. 3 & 4 are directed to pay OP- 1 & 2 Bank Rs.21,72,207/- along with simple interest @ 7% per annum for repayment of the loan amount from the date of repudiation of the claim till the date of full payment, within a period of one month from the date of this order. In the event of delay, the rate of simple interest applicable shall be 10% for such extended period. The amount which remained with OP-1 and 2 Bank, after adjustment of entire loan amount as required shall be paid to the Complainant, being nominee and father of Sarbjit Singh DLA, within a period of one month thereafter.

II. The order awarding the composite amount of compensation of Rs.60,000/- to Complainant for mental harassment and litigation expenses payable by OP-3 and 4 is reduced to Rs.20,000 towards the cost of litigation.

22.    All pending Applications, if any, stand disposed of accordingly.

23.    The Registry may refund the statutory amount, if any due, deposited by the Appellant, after compliance of the order of the learned State Commission.