Sri Shyamal Gupta, Member

Disputing the dismissal of the complaint case being filed by him, this Appeal is moved by Sri Shiva Ratan Bajoria u/s 15 of the Consumer Protection Act, 1986.

The Appellant’s case, in short, is that the Respondent was well aware of his previous mediclaim policy being taken from National Insurance Co. Ltd. Therefore, according to the Appellant, the Respondent’s projected unfamiliarity with the past medical conditions of his wife does not hold good. There was no misrepresentation and/or non-disclosure of any material fact on the part of the Appellant.  It is claimed that the medical conditions, for which the subject claim was lodged, developed subsequently and therefore, the same cannot be treated as a pre-existing/continued disease.  Accordingly, this Appeal is preferred for setting aside the impugned order.

We have heard the parties and gone through the documents on record.

Ld. Advocate for the Respondent submitted that the Insured was admitted at Belle Vue Clinic, Kolkata on 14-08-2014 for treatment of dilated cardiomyopathy, systolic dysfunction, diabetic neuropathy and chronic liver disease. Drawing our attention to the treatment sheets on record, Ld. Advocate further pointed out that the Insured was previously diagnosed for carcinoma endometrium, cirrhosis of liver (likely NASM related) and developed radiation proctitis. However, concealing those medical conditions, the instant policy was ported. Therefore, the instant claim was repudiated by the Insurance Company.

Such contention of the Ld. Advocate for the Respondent Insurer notwithstanding, on due consideration of the facts and circumstances of the case in its entirety, it appears to us that the instant claim was unjustly been repudiated by the Respondent.  We are constrained to hold such view on due consideration of IRDAI’s guideline pertaining to the portability of mediclaim policies.

In terms of Clause No. 6 of the aforesaid guideline (No. IRDA/HLT/MISC/CIR/209/09/2011, dated 09-09-2011), it was incumbent upon the Respondent to address the previous Insurance Company to provide necessary details of medical and claim history of the concerned policyholder(s) within 7 days of receipt of the Portability Form from the Appellant.

Whenever something is thrust upon the Insurance Company by the Regulator, it becomes all the more necessary for the former to follow suit; there is no escaping from the same.  There is in fact no plausible reason to believe that no such enquiry was at all made by the Respondent from the erstwhile Insurance Company of the Appellant.  May be, no additional premium was levied in respect of the pre-existing diseases.  Who knows, whether the same was purposely done or not to escape all future liabilities under the policy in question as has been done in respect of the present claim of the Appellant.

Apart from statutory obligation, being a private sector Insurance Company, it is hardly believable that the Respondent did not weigh the impending risk factors minutely before issuance of the policy in question. The alibi of ignorance about the past medical history of the Insured, as feigned by the Respondent, accordingly, does not hold water under any circumstances. If indeed no such due diligence was carried out beforehand, the buck stops at its doorstep.  On account of its own laxity, if at all that was the case, the Respondent cannot blame others.

It is to be kept in mind that the proposal form was not filled up by the Appellant, but by the authorized agent of the Respondent.  It is an open secret that agents of Insurance Companies only highlight the brighter side of the policy concerned and remain extremely cautious to keep the grey areas under the carpet and obtain signatures of prospective policyholders on the dotted line and fill up the blank spaces behind the back of the applicant.  The concerned agent of the Respondent Insurer did not depose before the Ld. District Forum to confirm that deviating from prevailing practice, he explained the nitty-gritty of the portability to the Appellant and filled up the proposal form in front of the Appellant. There is no reason to believe that the Appellant was not appreciative of the fact that in case of any claim during subsistence of the insurance policy, the Insurer would invariably dig out the past medical history of the Insured. Therefore, there was hardly any room to conceal the past medical history of the Insured.  Thus, if we take an empirical view of the matter, we find no good reason to blame the Appellant entirely for non-disclosure of material facts, as alleged. In this regard, we may profitably refer to the following observation of Hon’ble Supreme Court in D. Srinivas vs. SBI Life Insurance Co. Ltd., 2019 (1) CPR 16 (SC) – “The insurance contract being a contract of utmost good faith, is a two-way door. The standards of conduct as expected under the utmost good faith obligation should be met by either party to such contract…..it may be seen that the condition precedent for acceptance of the premium was the medical examination. It would be logical for an underwriter to accept the premium based on the medical examination and not otherwise. Therefore, by the very fact that they accepted the premium waived the condition precedent of medical examination”.

It is indeed sad that, on the pretext of suppression of material fact, the Respondent not only turned down the instant claim of the Appellant, but also cancelled the instant mediclaim policy abruptly putting the Appellant at great distress.  In this regard, it may not be out of the context to state here that mere suppression of material fact does not render a contract null and void.  In terms of Sec. 19 of the Indian Contract Act, 1872, even if consent to an agreement/contract is caused by misrepresentation, in that case also, the contract is not voidable if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.   We, thus, cannot approve such arbitrary cancellation of the subject policy and declare the letters dated 28-11-2014 and 07-01-2015, being issued by the Respondent null and void. Consequent thereof, to our mind, the Respondent must discharge its contractual obligation towards the Appellant in toto.

In the foregoing paragraphs although we have highly criticized the conduct of the Respondent, we cannot overlook the fact that there was contributory negligence on the part of the Appellant too.  He ought to ensure that the proposal form was duly/correctly filled up by the agent concerned. 

Considering all aspects, accordingly, we deem it appropriate to allow this Appeal in part.  The impugned order hereby stands set aside. Respondent is directed to settle the claim of the Appellant on non-standard basis by paying 60% of the claim amount within 40 days from this day, i.d., the decretal amount shall carry simple interest @ 9% p.a. for the entire period of default.