State Consumer Disputes Redressal Commission
U.P., Lucknow.
Complaint Case No.521/2017
- Atul Kumar aged about 36 years , S/O Late Ramashray Rai , R/O 8/194 , Secor- 8 , Jankipuram Lucknow
- Ansuman Rai aged about 06 years , S/o Atul Kumar , R/O 8/194 , Secor- 8 , Jankipuram Lucknow through his natural guardian namely Atul Kumar
… Appellants.
Versus
- Star Health and Allied Insurance Company Limited , No. 1 , New Tank Street , Vallurvar Kottam High Road , Nungambakkam , Chennai – 600034 , through it Chief Managing Director .
- Zonal Office , 501 , Lekhraj Market -3 , 2nd Floor , Faizabad Road , Lucknow through it’s Zonal Manager
….Opposite Parties
Present:-
1- Hon’ble Shri Govardhan Yadav , Presiding Member.
- Hon'ble Shri Rajendra Singh , Member.
Sri B K Tripathi, learned counsel for the complainant.
Sri Shishir Pradhan , learned counsel for opposite parties.
Date 22.01.2021
JUDGMENT
Per Shri Rajendra Singh, Member.
This complaint has been filed by complainant under section 17 of the Consumer protection act, 1986 against the opposite parties The Star Health and Allied Insurance Company Limited.
The brief facts of this complaint are that that the instant complaint arises from the arbitrary, unauthorized, illegal and perverse action of the opposite party number one and two by means of order dated 07.06.2017 sent through email rejecting the medical claim of son of complainant’s number one Anshuman Rai , who was insured by policy number P/231100/01/2014/001530 . The complainant also aggrieved by the termination of health Insurance Policy by undated order w.e.f 27.05.217 in the midterm though it was valid till 27.0.2018 midnight as per mention condition number 14 of the policy clause illegally and arbitrarily. The rejection order is of 07.06.217.
The complainant, his wife and son namely Anshuman Rai insured themselves with the company of opposite party policy number P/231100/01/2014/001530 valid since 28.02.2014 to 27.02.2015 midnight and total premium was ₹ 18,719.00 . ID card was issued , complainant’s Identity Card Number is 3402889 – 1 , complainant’s wife Identity Card number 3402889 – 2 and the Identity Card number of his son Anshuman Rai is 02889 – 3 but no Insurance Policy issued by opposite parties. It is clearly mentioned that pre-existing disease/es nil. The aforesaid policy has been renewed from time to time from 28.02.2015 to midnight of 27.02.2016 and from 28.02.2016 to midnight of 27.02.2017 and from 28.02.2017 to 27.02.2018 . In aforementioned all policies pre-existing disease/s shown as nil .
The son of complainant number one i.e, complainant number two was born in Shakun Maternity Home on 08.08.2011 at 7:48 AM and discharged from hospital on 11.08.2011 . Dr Nilima Singh mentioned on the discharged slip that no Congenital anomalies seen and complainant’s son was also kept under the observation of Paediatric Physician Dr P.P.Gupta and nothing has been found as congenital anomalies by Doctor . Dr PP Gupta Paediatric Physician Child Specialist and neonatologist also certified that at the time of birth of child of complainant number one no tuft of hair and café au lait spots on body at birth and this can be confirmed by the papers nearby five year age “this is to certify that I was the attending paediatrician baby of Smt Upma Rai on 08.08.211 LSCS delivered at 7:48 AM, my delivery note are already attached. This may be had no tuft of hair or café-au-lait spot on body at birth. This can be confirm by my papers nearby five year age and subsequent consultation was as 11.08.2011.
The complainant number one saw some spot at the back of the son and thereafter, the complainant consulted with the Dr and suggested to consult at Medanta Global Health Private Limited . The complainant went to Medanta and consulted with the doctors on 22.06.2016 and after examining the son , the doctor found that large hairy brown patch on the right side of Chest and back multiple café-au-lait spot detected in the medical examination. The complainant for the first time got the knowledge of this disease and he was suggested for MRI and EEG . EEG has been conducted on 23.06.2016 and recorded conclusion normal EEG in wakefulness and sleep. No epileptiform discharges were seen and MRI brain with epilepsy protocol dated 24.06.216 also conducted and report was normal. MRI dorsal spine with contrast with screening rest of the spine done on 24.06.2016 and impression was found as clinically neurofibromatosis. confluent heterogeneously enhancing diffuses extradural soft tissues in B/L para vertebral region from D3 to D8 vertebral levels are mildly extending in the extra pleural space and abutting the costovertebral joints . These masses are causing scalloping ,thinning of posterior end to the ribs and scalloping irregularity of the vertebral cortex. No extension in the spinal canal thinning of the posterior elements, pedicle of the vertebrae with consequent widening of the spinal canal is seen – charges associated with neurofibromatosis. Findings suggest plexi form neurofibromatosis.
On 13 July 2016 the complainant number one went to the Primus Super Specialty Hospital Department of spine surgery after suggestion given by the concerned doctor and on 15 July 2016 Dr after examining to the patient café-au-lait is part and tuft of hair mid back has been found and therefore advise for surgery. The complainant number one made a request for cashless treatment of his son but denied by the opposite parties and denial for authorisation for cashless treatment vide order dated 24 August 2016 and also informed member may seek for reimbursement. This son of the complainant number one got admitted for the treatment in the Primus super specialty hospital on 25 August 2016 and after the successful operation complainant number two was discharged from the hospital on 2 September 2016. The complainant number one has spent ₹ 1,475,567 /-in the Primus Super Specialty Hospital and also spent ₹ 29,510/-for treatment in Medanta Global Health Private Limited Gurgaon .
The disease of complainant number two mentioned above is neither genetical disease nor birth disease and parents of the complainant number one or any family member had no such type of disease earlier and complainant number one for the first time came to know about this disease of his son during consultation in the Medanta Global Health Hospital Gurgaon . As per browser of clause-II of opposite parties congenital internal means congenital anomaly which is not in the visible and accessible parts of the body and also described for pre-existing disease means any condition or ailment or injury or related condition for which the insured person had signs or symptoms and/or were diagnosed and/or received medical advice/treatment within 48 months prior to insured person first party with any Indian Insurance Company. It is very relevant to submit here that the complainant got insured his family including his son on 28 February 2014 and agent of opposite parties also written in the insurance policy pre-existing disease Nil, therefore, the opposite party cannot deny the claim of the complainant is denied by the order dated 7 June 2017.
Complainant number 1 sent application to the opposite parties through email on 21 May 2017 for reimbursement of expenses during the treatment/operation of spinal region of his son and on 21 May 2017, the opposite parties replied that they advised the claim department to review the claim and you will get the communication at the earliest. Some query has been made by the grievance department of the opposite parties, the complainant sent all the query through email and visite several times the hospital situated at Delhi. All the papers which were demanded by the opposite parties submitted by the complainant and thereafter on 16 December 2016 they put some objections but not informed about the aforesaid objection and when the petitioner contacted to regional office of opposite party number 1 , then complainant got letter from the zonal office of opposite parties on 06 March 2017 and no reply has been given to the complainant.
The essence of the Consumer Protection Act 1986, is to protect the right and interest of the consumer from being mutilated and twisted at the behest of the respondent and if at this point of time this Hon’ble commission does not take cognizance of the matter then certainly the complainant will suffer irreparable loss which will also result in trivialization of the concept of law and justice. The primary object and provision of the Consumer Protection Act clearly established the mandate of the legislation and the intention of the legislature to safeguard the right and interest of the complainant otherwise the protection granted under this act will reduce to a mere illusory object. The opposite parties had adopted corrupt practices absolutely abhorring the mutual agreement term and condition of the element of risk/health cover (Health Insurance) and law as laid down by Insurance Regulatory Development Authority ( IRDA ) which is the authoritative governing body constitute to regulate the health insurance policies in the country.
The congenital internal defined in the browser of opposite party in cover is – 2’s definition clause as ‘congenital anomaly’ which is not in the visible and accessible parts of the body and congenital external defined as congenital anomaly which is in the visible and accessible parts of the body and also defined pre-existing disease means any condition or ailment or injury or related condition for which the insured person had signs or symptoms and/or were diagnosed and/or received medical advice/treatment within 48 months prior to insured persons first policy with any Indian Insurance Company. The pre-existing disease as defined in the browser of second coverage in definition clause, the complainant number two did not receive any medical advice/treatment/diagnosed or symptoms within 48 months prior to 1st policy of insurance with any Indian Insurance Company and the complainant number1 for the first time came to know about the disease in the month of June 2016, when the wife of complainant saw hair on black spot and then complainant number one met with the doctors and got examined his son in this regard there after the complainant came to know about the disease as café-au-lait spots and tuft of hair and at the time of the birth or at the time of the insurance policy the complainant number 2 has not any such type of mark or disease hence the rejection of claim of complainant number two dated 7 June 2017 received through email is illegal and arbitrary.
The opposite party number1 illegally and arbitrarily ousted the complainant number 2 from the Health Insurance Policy w.e.f 17 May 2017 illegally and arbitrarily without any notice in violation of the principle of the natural Justice though the complainant number 1 came to know about the disease of his son in the month of June 2016 and at the time of birth no apparent congenital anomaly seen as certified by doctor Nilima Singh Obstetrics and Gynaecology and also certified by Dr PP Gupta Child Specialist and Neonatologist. In view of the facts, reasons and circumstances stated in the preceding paragraphs with substantial reasoning logic and justification in the interest of justice, equity and fair play that this Hon’ble commission, the complainant seeks the intervention of this Hon’ble Commission for safeguarding the legitimate right and interest of the complainants.
The complainant prays the Hon’ble commission to allow the complainant and quash the order dated 07.06.2017 by means of which claim of complainant number 2 has been rejected and undated termination order of agreement of health policy pertaining to the complainant number 2 w.e.f 27.05.2017 . The complainant also prays the Commission to direct to opposite parties to continue Health Policy/Health Insurance of the complainant number two . It is also prays that the opposite parties be directed to pay ₹ 1,505,077/- spent on the treatment, ₹ 34 lakhs towards mental agony and harassment the complainant.
The opposite parties has filed their written statement and there version is that they issued Star Comprehensive Insurance Policy covering Atul Kumar self, Mrs Upma Rai (Wife) and Baby Anshuman Rai for the sum insured ₹ 750,000/-. However, the complainant number one did not disclose any pre-existing disease of baby Anshuman Rai in the proposal form. Therefore, answering opposite parties has rightly repudiated their claim as by letter dated 20 March 2017 and also cancelled the policy of insured Anshuman Rai vide letter dated 27 May 2017 in the compliance of condition number 14 of the insurance policy. The answering opposite parties thereby refunded ₹ 3852/-which was the remaining premium amount. Therefore, the repudiation of claim is justified in the eye of law. The present respondents have submitted the copy of insurance policy along with terms and conditions contained therein. The insured patient baby Anshuman Rai was taken for the medical treatment in Primus Spinal Super Speciality Hospital on 13.07.2016 , 15.07.2016 , and 20.07.016 . The doctor there has observed that the child has café au lait spots and was diagnosed with neurofibromatosis, further the said baby was admitted in Primus Super Speciality Hospital on 25 August 2016 and was discharged on second September 2016 . According to discharge summary the patient has past history of fever associated with seizure two years back and he was early onset scaliosis secondary to neurofibromatosis type-1 . Hence the insured patient has café au lait spots and tuft of hair which is prior to inception of medical insurance policy. This significant medical funding has not been disclosed by the complainant Before This Hon’ble Commission.
A café au lait macule is a common birthmark, presenting as a hyper pigmented skin patch with a sharp border and diameter of less than 0.5 cm and it is also known as circumscribed café au lait hypermelanosis, van Recklinghausen spot , or abbreviated as ‘CALM ‘.café au lait are present at birth ( congenital ) or appear in early infancy . They may be isolated or associated with systemic diseases such as neurofibromatosis , McCune Albright syndrome , Legius Syndrome and Leopard Syndrome. Thus, the insured patient has café au lait macule since his birth and the same was not disclosed as in the proposal form. The insured patient was two years and six months old at the time of inception of the said insurance policy. Hence, the said café au lait macule/light brown patches on the skin which is visible and the insured has knowledge of the same. At the time of inception of the policy which is valid from 28 February 2014 till 27 February 2015 , the insured had not disclosed the above-mentioned medical history / health details of the present insured person as in the proposal form which amounts to misrepresentation/non-disclosure of material facts . It is further submitted that EFG and MRI brain and MRI dorsal spine report dated 24 June 2016 also corroborates and concludes the facts that insured was suffering from disease café au lait spots and tuft of hair.
The insured submitted the claim form, discharge summary of previous hospital and birth discharge and MRI image. It was discovered that the insured Anshuman has pre-existing disease as from last years back therefore, the cashless treatment was thereby denied. According to condition number 9 of insurance policy, if there is any misrepresentation/nondisclosure of material facts whether by the insured person or any other person acting on his behalf , the company is not liable to make any payment in respect of any claim. Hence the claim was rightly and legally repudiated and the same informed to the insured vide letter dated 20 March 2017. The insured patient has not disclose his pre-existing disease as in proposal form therefore, he is not entitled for any compensation. It is rightly observed as from the submitted medical records that the insured patient has café au lait spots and tuft of hair which was recognised from the time of birth, which is prior to inception of medical insurance policy . This significant medical finding was not disclosed. At the time of inception of the policy which is from 28 February 2014 till 27 February 2015, the insured had not disclosed the above-mentioned medical history/health details of the insured person in the proposal form which amounts to misrepresentation/nondisclosure of material facts.
The insured claim was repudiated as on the ground that he has not disclosed his pre-existing disease. Therefore, his health insurance policy was cancelled and amount of ₹ 3852 was refunded and same was informed to the insured as vide letter dated 27 May 2017 with prior information in compliance of condition number 14 of the insurance policy . Condition number 14 is reproduced as below –
“ the company may cancel this policy on grounds of misrepresentation, fraud, moral hazard, nondisclosure of material fact as declared in proposal form”
the complainant has adopted malafide practice and obtained insurance policy in wrongful manner, he has not disclosed the material fact in proposal form. Therefore, it is clear violation of condition number nine of insurance policy. Hence his claim was correctly repudiated by the answering opposite parties. Therefore the present complaint cases misconceived not maintainable before the Hon’ble Consumer Commission. According to section 17 of Consumer Protection Act 1986 the pecuniary jurisdiction of Hon’ble State Consumer Dispute Redressal Commission is that” complaints were the value of the goods or services and compensation, if any claim exceeds ₹ 20 lakhs but shall not exceed rupees one crore then it shall be entertained before the State Commission. In the instant case, the valuation of the claim is ₹ 1,505,077/- . Hence the present complaint is not maintainable before the Hon’ble State Commission”. The complainant’s before this Hon’ble Commission in their prayer number three has demanded a sum of ₹ 1,505,077/-for expenses incurred and ₹ 3,40,0000/-as mental agony and harassment. Therefore, he has demanded a sum of ₹ 4,905,077/-as total compensation. However the complainant in their pleading has not whispered any single word as to what is the justification for claiming sum of ₹ 34 lakhs as mental agony and harassment. Therefore, prayer without pleading is illegal and unlawful and against the settled principle of the Consumer Protection Act. Therefore, present complaint is not maintainable before the Hon’ble State Consumer Dispute Redressal Commission, Lucknow on the ground of pecuniary tradition. Hence the present complaint is misconceived and liable to be dismissed on the ground of maintainability.
In their additional written statement on behalf of opposite party number one and two, it is stated that the claim of the present complainant is not payable as in accordance to the terms and conditions of insurance policy as per the ground taken in previous written statement. It may be relevant to submit here that even if the Hon’ble State Consumer Commission Thinks Fit to admit this complaint, it is really submitted that the quantum may be considered subject to terms and conditions of the insurance policy. As such the maximum quantum of liability as per terms and conditions of the policy that can be said to have is ₹ 1,244,869/- against the total Bill submitted four ₹ 4,025,567/- . Further complainant has submitted the bill for ₹ 1,486,110/-and has not submitted the cash receipts for the same. The respondent is strictly denies in respect of expenditure incurred ₹ 1,505,077/-. The necessary deduction were made as mentioned in computation of billing sheet according to terms and conditions of the insurance policy.
We have heard the learned counsel for the parties and have gone through the evidence filed by the parties and records.
The following case laws have been filed by the opposite party –
- Satwant Kaur Sandhu Vs New India Assurance Co Ltd, (2009) 8 Supreme Court cases 316
In this case ,On 7th May, 1990 appellant's husband, late Shri Pritpal Singh Sandhu, 48 years old and an advocate by profession, after completing necessary formalities insured himself under a mediclaim policy provided by the respondent. The policy was for a period from 7th May, 1990 to 6th May, 1991. The annual premium of Rs.1500/- was also paid by him. On 11th September, 1990, Pritpal Singh suddenly fell ill and was admitted in Dayanand Medical College and Hospital, Ludhiana. On 7th December, 1990 he was shifted to Madras Institute of Nephrology also known as, Vijaya Health Centre, Chennai where his condition deteriorated, ultimately leading to his death on 26th December, 1990. The appellant informed the respondent about the death of her husband on 17th January, 1991. On 29th April, 1991 she filed a claim for Rs.23,217.80 for reimbursement of the expenses incurred on hospitalization.
3. The respondent - Insurance Company made inquiries from Madras Institute of Nephrology (Vijaya Health Centre) and obtained a certificate dated 6th May, 1992, (Annex.P-6) stating that the deceased was a known case of "Chronic Renal Failure/Diabetic Nephropathy"; was on regular haemodialysis at his place and after admission on 7th December, 1990 with severe breathlessness developed sudden cardiac arrest on 26th December, 1990 leading to his death. The certificate also stated that the insured was a known diabetic for the last 16 years. Thereupon, the respondent vide letter dated 30th August, 1993 informed the appellant that her claim had been repudiated. Being aggrieved, the appellant filed Consumer Complaint Case No. 48 of 1996 before the Consumer Dispute Redressal Forum No.IV at Bunkar Vihar Nand Nagri, New Delhi ("District Forum" for short) with the prayer that the Insurance Company should be directed to pay the claim amount of Rs.23,217.80 along with interest @ 24% per annum and compensation for agony as also the litigation expenses.
The District Forum accordingly directed the respondent to pay the claimed amount with interest at 12% per annum from 1st April, 1991 i.e., 3 months after the death of the insured till the date of actual payment. The respondent was also required to pay Rs.1000/- as cost of litigation.
aggrieved, the respondent - Insurance Company preferred appeal before the State Commission. The State Commission vide its order dated 31st December, 1998, allowed the appeal and set aside the order of the District Forum. The relevant part of the order reads as under:
"Death of the insured occurred within seven months of taking the mediclaim policy and Section 45 of the Insurance Act is not even remotely attracted. We are of the considered view that repudiation of the claim was on a consideration of the aforesaid record of the Madras Institute of Nephrology and, therefore answer to col. 10 of the proposal form amounted to mis-representation and suppression of material facts regarding health made by the policy holder. No case of deficiency in service has been established."
7. Being aggrieved by the order of the State Commission, the appellant filed Revision Petition before the National Commission. As noted earlier, the National Commission has dismissed the Revision Petition, by a short order, which reads thus:
"It is a case of concurrent finding of fact recorded both by the District Forum and the State Commission. We do not find any reason to interfere with the order passed by the State Commission. The Revision Petition is dismissed."
The appellant went to Hon’ble Supreme Court . Hon’ble Supreme Court held-
“ 12. There is no dispute that Section 45 of the Insurance Act, 1938 (for short "the Act"), which places restrictions on the right of the insurer to call in question a life insurance policy on the ground of mis-statement after a particular period, has no application on facts at hand, inasmuch as the said provision applies only in a case of life insurance policy. The present case relates to a mediclaim policy, which is entirely different from a life insurance policy. A mediclaim 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 uberrimae fidei, 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. Of course, obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known. The obligation to disclose necessarily depends upon the knowledge one possesses. His opinion of the materiality of that knowledge is of no moment. (See: Joel Vs. Law Union & Crown Ins. Co.1)
13. In United India Insurance Co. Ltd. Vs. M.K.J. Corporation2, this Court has observed that it is a fundamental principle of insurance law that utmost faith must be observed by the contracting parties. Good faith forbids either party from non- disclosure of the facts which the party privately knows, to draw the other into a bargain, from his ignorance of that fact and his [1908] 2 K.B. 863 (1996) 6 SCC 428 believing the contrary. (Also see: Modern Insulators Ltd. Vs. Oriental Insurance Co. Ltd.3).
14. MacGillivray on Insurance Law (Tenth Edition) has summarised the assured's duty to disclose as under: "...the assured must disclose to the insurer all facts material to an insurer's appraisal of the risk which are known or deemed to be known by the assured but neither known nor deemed to be known by the insurer. Breach of this duty by the assured entitles the insurer to avoid the contract of insurance so long as he can show that the non-disclosure induced the making of the contract on the relevant terms."
15. Over three centuries ago, in Carter Vs. Boehm4, Lord Mansfield had succinctly summarised the principles necessitating a duty of disclosure by the assured, in the following words:-
"Insurance is a contract of speculation. The special facts upon which the contingent chance is to be computed lie most commonly in the knowledge of the assured only; the underwriter trusts to his representation, and proceeds upon confidence that he does not keep back any circumstance in his knowledge to mislead the underwriter into a belief that the circumstance does not exist. The keeping back such circumstance is a fraud, and therefore the policy is void. Although the suppression should happen through mistake, without any fraudulent intention, yet still the underwriter is deceived and the policy is void; because the risqui run is really different from the risqui understood and intended to be run at the time of the agreement...The policy (2000) 2 SCC 734 (1766) 3 Burr. 1905 would be equally void against the underwriter if he concealed...Good faith forbids either party, by concealing what he privately knows, to draw the other into a bargain from his ignorance of the fact, and his believing the contrary."
17. The term "material fact" is not defined in the Act and, therefore, it has been understood and explained by the Courts 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".
18. As stated in Pollock 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 degree and character of risks in fixing the rate of premium is a material fact.'
22. Answers given by the proposer to the two questions were "Sound Health" and "Nil" respectively. It would be beyond anybody's comprehension that the insured was not aware of the state of his health and the fact that he was suffering from Diabetes as also chronic Renal failure, more so when he was stated to be on regular haemodialysis. There can hardly be any scope for doubt that the information required in the afore- extracted questions was on material facts and answers given to those questions were definitely factors which would have influenced and guided the respondent - Insurance Company to enter into the Contract of Mediclaim Insurance with the insured. It is also pertinent to note that in the claim form the appellant had stated that the deceased was suffering from Chronic Renal Failure and Diabetic Nephropathy from 1st June, 1990, i.e. within three weeks of taking the policy. Judged from any angle, we have no hesitation in coming to the conclusion that the statement made by the insured in the proposal form as to the state of his health was palpably untrue to his knowledge. There was clear suppression of material facts in regard to the health of the insured and, therefore, the respondent - insurer was fully justified in repudiating the insurance contract. We do not find any substance in the contention of learned counsel for the appellant that reliance could not be placed on the certificate obtained by the respondent from the hospital, where the insured was treated. Apart from the fact that at no stage the appellant had pleaded that the insured was not treated at Vijaya Health Centre at Chennai, where he ultimately died. It is more than clear from the said certificate that information about the medical history of the deceased must have been supplied by his family members at the time of admission in the hospital, a normal practice in any hospital. Significantly, even the declaration in the proposal form by the proposer authorises the insurer to seek information from any hospital he had attended or may attend concerning any decease or illness which may affect his health.”
2. P.C.Chako and Another Vs Chairman Life Insurance Corporation of India And Others, (2008) 1 Supreme Court Cases 321.
In this case ,
3. Plaintiffs in the suit are the appellants herein. They filed the said suit inter alia for recovery of the amount of insurance on the death of one Chackochan (hereinafter referred to as the insured). The insured took an insurance policy on 21st February, 1987. He died on 6th July, 1987. On his death, the appellants herein claimed the insured amount. On the premise that the insured suppressed material facts, the policy had been repudiated by the respondent on 10th February, 1989. Non-disclosure and mis-statement in the proposal form to the various questions to which answers were given by the insured is said to be the reason for the aforementioned repudiation of the contract of insurance.
4. It now stands admitted that the insured had undergone an operation for Adenoma Thyroid. The particulars furnished by him while filling up the application form for obtaining the said policy were as under :-
(a) Did you ever have any operation, accident or injury? The answer was No. (b) Have your remained absent from place of your work on ground of health during the last 5 years ? To which answer was No. (c) What has been your state of health? The answer was good.
The fact that the said answers were incorrect is not in dispute. The suit filed by the appellants, however, was decreed.
5. On an appeal preferred by the respondents, on the premise that despite such wrong answers, as the injured died on account of polyneuritis, a learned Single Judge of the High Court opined that there was nothing to indicate that if the injured had disclosed the factum of previous operation, the appellant-Corporation might not have inclined to insure and insisted on a higher premium and thus there was no material to show that the non- disclosure was of a material fact justifying repudiation of the policy by the Corporation.
6. On an intra court appeal, the Division Bench of the High Court, however, by reason of the impugned judgment opined that the parties are bound by the warranty clause contained in the agreement which is also clear from the declaration signed by the insured and the non-disclosure related to a material fact which was required to be answered correctly under question No.22(a).
(10) One great principle of insurance law is that a contract of insurance is based upon utmost good faith Uberrima fides; in fact it is the fundamental basis upon which all contracts of insurance are made. In this respect there is no difference between one contract of insurance and another. Whether it be life or fire or marine the understanding is that the contract is uberrima fides and though there may be certain circumstances from the peculiar nature of marine insurance which require to be disclosed, and which do not apply to other contracts of insurance, that is rather an illustration of the application of the principle than a distinction in principle. From the very fact that the contract involves a risk and that it purports to shift the risk from one party to the other, each one is required to be absolutely innocent of every circumstance which goes to influence the judgment of the other while entering into the transaction.
21. In Life Insurance Corpn. Of India & Ors. v. Asha Goel (Smt) & Anr. [(2001) SCC 160], whereupon reliance has been placed by Mr. Sathish, it was held :
The contracts of insurance including the contract of life assurance are contracts uberrima fides and every fact of material ( sic material fact) must be disclosed, otherwise, there is good ground for rescission of the contract. The duty to disclose material facts continues right up to the conclusion of the contract and also implies any material alteration in the character of the risk which may take place between the proposal and its acceptance. If there are any misstatements or suppression of material facts, the policy can be called into question. For determination of the question whether there has been suppression of any material facts it may be necessary to also examine whether the suppression relates to a fact which is in the exclusive knowledge of the person intending to take the policy and it could not be ascertained by reasonable enquiry by a prudent person. It has not been shown in this case that repudiation of the contract of insurance was not done by the respondent with extreme care and caution or was otherwise invalid in law.
24. In Ratan Lal & Anr. v. Metropolitan Insurance Co. Ltd. [AIR 1959 PAT 413], a distinction was made between as to what is material and what is not material. In regard to the disclosure of facts in that case itself, it was opined :
The well-settled law in the field of insurance is that contracts of insurance including the contracts of life assurance are contracts uberrima fides and every fact of materiality must be disclosed otherwise there is good ground for rescission. And this duty to disclose continues up to the conclusion of the contract and covers any material alteration in the character of the risk which may take place between proposal and acceptance.
26. Keeping in view the facts and circumstances of the case, we are of the opinion that no case has been made out for our interference with the impugned judgment. The appeal fails and is accordingly dismissed. No costs.
Café-au-lait spots or macules (CALS or CALM) are flat, pigmented spots on the skin. They are commonly referred to as “birthmarks”, but are often not present at birth. The name café-au-lait spot is derived from the French term for coffee (café) with milk (lait) because they usually have a light brown color.
“Neurofibromatosis” is actually a term, which encompasses at least two distinct disorders. Neurofibromatosis type 1 (NF1) is the more common, affecting about 1/4000 people throughout the world. Its major features are skin spots called cafe-au-lait spots and neurofibromas. It can affect nerves throughout the body, including in the brain and spinal cord. Neurofibromatosis type 2 (NF2) affects about 1/40,000 people. It is characterized by the appearance of tumors of the hearing and balance nerve (vestibular schwannomas), as well as other tumors of the nervous system. Both NF1 and NF2 are genetically determined disorders. Generally, all affected members of a family have the same form of NF. It is possible that other types of NF exist, but this has not yet been firmly established.
Cafe-au-lait spots are usually clearly visible by the first year of life. Plexiform neurofibromas may grow, or may be noticed for the first time at this point. Sometimes a few freckles may be seen in the armpits or groins, and a few small neurofibromas may be noticed on the skin. The neurofibromas usually appear as small bumps on the skin, which are soft to the touch and have a pink or purple hue. They are not painful and rarely cause problems other than cosmetic. Young children usually do not have more than one or two small neurofibromas, and may have none. Some children, however, develop multiple neurofibromas early in life. Such children do not necessarily develop additional severe complications of NF1 during childhood.
Two abnormalities of growth are commonly noticed in preschool children. One is short stature. Children with NF1 are often shorter than would be expected from the size of others in their family. The cause of this short stature is not known; medical testing is rarely productive, except in cases where growth rate suddenly and unexpectedly changes. The other abnormality of growth is increased size of the head. This generally does not cause discomfort to the child, and is usually not correlated with neurological problems. The head grows at a faster rate than normal, but at a steady, consistent rate. As long as this is the case, it is usually not necessary to do an examination such as a CT scan. In rare instances, the head growth may be associated with symptoms such as vomiting or headache. In such cases, a CT or MRI scan is usually done to be sure that increased pressure of fluid inside the brain (hydrocephalus) has not developed.
Brain tumors can occur at any point in life, including early childhood. Fortunately, they are not common. One form of tumor which is particularly associated with early childhood is the optic glioma. This is a tumor of the nerve to the eye, the optic nerve. When it occurs in a symptomatic form, it may cause loss of vision, pain, bulging of the eye, or affect pituitary hormone secretion. Such symptomatic optic gliomas are diagnosed by CT or MRI scanning and can be treated, usually by radia-tion treatment or chemotherapy. It is not uncommon to find evidence by CT or MRI scan of thickening of the optic nerve in children with NF1 who manifest no signs or symptoms of optic glioma. This may represent an abnormality of the development of the optic nerve in some children with NF1. Only rarely do symptoms of progression occur requiring treatment. It is recommended that all children with NF1 have opthalmologic exams, done at least annually, to insure early diagnosis of symptoms of optic glioma.
As has been mentioned already, most individuals with NF1 live long and generally healthy lives. Yet it must be recognized that some complications of neurofibromatosis can be life-threatening. The most frightening to many people is cancer. Neurofibromas are not cancerous growths; they do not spread through the body, even though they may appear in many places on the skin. In some persons, however, a cancer may develop within a neurofibroma. This does not usually happen to the small skin neurofibromas, but seems to be more likely to occur in the plexiform neurofibromas. The signs of malignancy would be the appearance of pain in a previously painless mass, and sudden growth. It is common for plexiform neurofibromas to be painful if bumped or otherwise traumatized, but this is different from the pain associated with malignancy. Pain indicative of cancer is more likely to occur spontaneously, without any evidence of injury to the mass. Likewise, not all growth indicates malignancy. Neurofibromas commonly grow, especially the plexiform neurofibromas. Sudden growth of a portion of the neurofibroma is more indicative of malignancy than slow, steady growth of a larger mass. Malignancy related to neurofibromatosis is estimated to occur in about 5% of affected individuals. Although this might seem like a large number, it must be compared with the fact that 25% of all people—with or without neurofibromatosis—will develop a malignancy sometime in their lives. The malignancies related to neurofibromatosis can be treated, usually with a combination of surgery, radiation, and chemotherapy. The outcome depends largely on how early the cancer is detected.
In addition to malignancies, the possibility of tumors in the brain and spinal cord must be considered. These, too, occur in relatively few persons with NF1, although the risk to people with NF1 of developing a brain tumor is much higher than the risk to the general population. These are usually detected after symptoms such as headache, vomiting, seizures, visual disturbance, or behavioral change are detected. There may be an abnormality noted on neurological examination. The tumor would be diagnosed by CT or MRI scan. Sometimes the tumor will be biopsied, or even removed, by surgery. The treatment is usually radiation therapy, or, in some cases, chemotherapy. It should be stressed that not all headaches in persons with neurofibromatosis mean that a brain tumor is present. Ordinary headaches, tension headaches and migraines, occur at least as commonly in persons with NF as in the general population. Persistent or especially severe headaches should be reported to a physician.
Now we have perused the repudiation letter of opposite party which runs as “at the time of inception of the policy which is from 28 February 2014 to 27 February 2015, you have not disclosed the above-mentioned medical history/has the details of the insured person in the proposal form which amounts to misrepresentation/non-disclosure of material facts leads to the violation of the principle of utmost good faith and making the contract of insurance voidable .
As per condition number 8 of the policy issue to you, if there is any misrepresentation/nondisclosure of material facts whether by the insured person or any other person acting on his behalf, the company is not liable to make any payment in respect of any claim. We are therefore unable to settle your claim under the above policy and the repudiation of claim is in order .”
According to this repudiation letter the insurance company has said , “in this connection, we would like to inform you that the insured patient has café-au lait and tuft of hair which were recognized at birth, which is prior to inception of medical insurance policy. This significant medical finding was not disclosed.”
Whether this disease is fatal or not ? These spots are known as birth marks too. These marks may either be present at the time of birth or may develop later on. The insurance policy is of 28 February 2014 on this date the age of complainant Anshuman Rai was two years six months and his date of birth has been written on the insurance form as 8 August 2011. There is discharge ticket of Shakun Maternity Home. This Discharge Ticket shows that a male baby delivered on eighth August 2 thousand 11 at 7.4 8 AM . At the time of discharge it is written on this ticket that no apparent Congenital Anomalies seen. A certificate of Dr P P Gupta has been filed which is that who was attending pediatrician at the time of delivery and his delivery note is already attached. He has said that this baby had no tuft of hair or café au lait spots on body at birth. From the medical science it is clear that these spots may either be at the time of birth or may develop later on.
In the discharge summary of master Anshuman Rai dated 25.8.2016, in the column of history of present illness, it has been written:
“ 3 months back patients mother noticed deformity or back which she feels is gradually progressive and increasing over time. Deformity is not associated with pain.
History of febrile seizure one episodes two years back and is taking anti-epileptics.
MRI suggestive of plexiform neurofibromatosis D3 to D8. No bowel & bladder involvement.”
In this report, it has been written that febrile seizure one episode two years back and is taking antiepileptics. Antiepileptic drug is used to treat epilepsy. Epilepsy is a kind of brain disease and it can cause a person to become unconscious but in this child it is related to brown spot and tuft of hair which is not from birth of the child as is clear from the certificate given by the doctor. So, it cannot be said that at the time of taking the policy, father of the child was well aware of this disease. As from many papers of the health Journal, it is clear that it may developed either from birth or afterwards.
As far as neurofibroma is concerned, they are not cancerous growths and they do not spread through the body, even though they may appear in many places on the skin. So as discussed above it is clear that this is simply a birthmark and if associated with tuft of hair at any time, it may be serious but not fatal. Every child has birth marks at the time of delivery so at that time it cannot be associated with any abnormality unless clinically tested and advised by the attending doctor or pediatrician. In the present case the pediatrician’s attending the mother at the time of child delivery has specifically written that there was no such mark at the time of birth, so how can a father right in the policy form that there is some disease from which his son is suffering.
So, in the present scenario, the opposite party failed to establish the fact that the baby Anshuman Rai was suffering from this disease by birth and there is concealment of fact at the time of taking the insurance policy. So the complaint is liable to be allowed . The point of jurisdiction is decided on the valuation clause of the complaint and not by other discussions. The amount of compensation sought by the complainant is on the higher side so it cannot be granted in toto. After considering all the facts and circumstances the complainant is liable to be allowed partially. The policy cancelled in the midterm is also liable to be extended till the date it was valid.
ORDER
The Complaint is allowed partially. The opposite parties are directed to pay ₹ 15 lakhs towards hospital charges with interest at a rate of 6% per annum from the date of filing of this complaint, ₹ 5 lakhs for mental agony, harassment and ₹ 20,000 as cost of the case within 30 days from the date of this judgement and if not paid within 30 days , the opposite parties shall be liable to pay interest at a rate of 10% per annum on whole amount. The opposite parties are also directed to extend the term of policy till the date it was valid.
( Govardhan Yadav ) ( Rajendra Singh )
Presiding Member Member
Judgment dictated/typed , dated and signed by us and pronounced in the open court.
Consign the record.
( Govardhan Yadav ) ( Rajendra Singh )
Presiding Member Member
Jafri / Court 1
