DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, KOZHIKODE

PRESENT: Sri. P.C. PAULACHEN, M.Com, LLB    : PRESIDENT

Smt. PRIYA.S, BAL, LLB, MBA (HRM) :  MEMBER

Sri.V. BALAKRISHNAN, M Tech, MBA, LL.B, FIE: MEMBER

Thursday the 30^th day of November 2023

CC.98/2021

Complainant

                   Ayisha Beevi. K,

                   W/o Late Ibrahim Kutty. K,

                   Kaithakath (HO),

                   Velimukku South. P. O,

                   Tirurangadi,

                   Malappuram District - 673117

                   (By Adv. Smt. Rijina. M. D)              

Opposite Parties

1.                The Oriental Insurance Company Ltd,

Divisional Office No. II, Mayoor Road,

Calicut - 673001

2.                M/s. Good Health Insurance TPA Ltd,

Radhika, 66/3199 Rajaji Road,

Opp. Axix Bank,

Ernakulam - 682018

3.                 Punjab National Bank,

3/57, P. V. Building,

Chellari, Velimukku,

Malappuram – 676317

(Op. 1 By Adv. Sri. Benny Joseph,

Op. 3 By Adv. Sri. K. Narayanan Kutty)              

ORDER

By Sri. P.C. PAULACHEN  – PRESIDENT

            This is a complaint filed under Section 12 of the Consumer Protection Act, 1986.

2.  The case of the complainant, in brief, is as follows:

The complainant and her husband Ibrahim Kutty have been the account holders of the third opposite party bank since the year 2017. On the request of the third opposite party bank through the second opposite party, the complainant and her husband had joined PNB-Oriental Medi Claim Policy 2017 – Group Health Insurance Product Policy For Bank Account Holders Of Punjab National Bank Only. It was informed by the third opposite party that it was a continuing insurance policy scheme wherein they would deduct the yearly premium well in time from the account of the complainant and her husband. The third opposite party had deducted a premium of Rs. 7,320/- on 2/09/2019 for the period of insurance covering from 3/09/2019 to 2/09/2020. The premium due date was on 3/09/2020. But the third opposite party omitted to deduct the premium amount on 3/09/2020 as per the above scheme and instead the premium amount was deducted only on 7/10/2020.

3. The complainant and her husband were tested Covid 19 positive and her husband was hospitalised from 3/10/2020 to 12/10/2020 and he succumbed to death. The complainant was also laid up and was under quarantine at her house.
4. After the quarantine period, the complainant approached the bank for the insurance claim. Then she came to know that the bank  had omitted to remit the premium in time and the amount was remitted only on 7/10/2020. There was no fault on the part of the complainant in remitting the continuing premium as on the due date. There was sufficient balance for remitting the insurance premium amount. The total sum insured was Rs. 3,00,000/-
5. The complainant had spent an amount of Rs. 5,48,000/- for the treatment of her husband in the Aster Mims Hospital, Kozhikode which ought to have been reimbursed to her to a limit of  Rs. 3,00,000/- as per the policy terms and conditions. The complainant is entitled to get medical expenses of her husband for his treatment for the period of policy ie. from 7/10/2020 to 12/10/2020. But the claim was repudiated by the opposite parties and thereby there was deficiency of service on their part. On 18/01/2021 the complainant issued a lawyer notice to the opposite parties, which was replied by the first and second opposite parties with untenable contentions. Hence the complaint to direct the first opposite party to pay an amount of Rs 3,00,000/- towards the medical expenses incurred in connection with the treatment of the complainant’s husband Ibrahim Kutty and to direct the opposite parties to pay a sum of                    Rs 50,000/- as compensation to the complainant.
6. The first and third opposite parties resisted the complaint by filing written version separately. The second opposite party was set ex-parte.
7. The policy is admitted by the first opposite party. The policy is subject to the terms and conditions and exclusion clauses attached to it. It is true that for renewing the policy, the premium was to be paid before 3/09/2020. The premium was paid only on 7/10/2020 after 34 days. The company is not responsible for the late payment of premium. The above policy is issued to the account holders of Punjab National Bank. A new policy covering the period from 7/10/2020 to 6/10/2021 was issued to the complainant. The earlier policy lapses if the premium is not paid within the grace period of 30 days. The premium in this case was paid only after the grace period and the new policy cannot be treated as continuation of the earlier policy.
8. At the time of issuance of the new policy, the husband of the complainant was suffering from Covid 19 and was under  treatment for the same. The new policy was opened by the complainant after supressing the material facts regarding the illness of the insured. The claim was repudiated because of the non-disclosure of material facts and 30 days of waiting period exclusion under the terms and condition of the policy. The claim was repudiated for valid reasons. The allegation that the complainant had to undergo mental agony due to the act of the opposite parties is false and hence denied. None of the reliefs is allowable. It is, therefore, prayed to dismiss the complaint with costs.
9. The third opposite party, in their version, has admitted that the complainant is having joint savings banks account with her husband with the bank and they have taken a policy under Punjab National Bank Oriental Medi Claim Policy. It is not true that the complainant and her husband have taken the policy up on the request of the bank. The bank has brought to the notice of the complainant regarding the above insurance policy and the complainant and her husband approached the insurance company and taken the policy and there was no compulsion at all from the side of the bank. The premium was paid by the complainant and her husband from the accounts maintained with the bank.  It is purely the discretion of the complainant to pay the regular premium as per the scheme to the insurance company and keep the policy alive. It is the duty of the complainant to pay the instalment on due date. The bank can only transfer the amount to the insurance company up on the request of the account holder. Unless and until an instruction from the complainant is received, the bank will not deduct the premium from the SB Account.
10. On 7/10/2020 the complainant instructed the bank to transfer the amount from her account and accordingly the bank immediately transferred the amount to the insurance company and the policy was renewed. The bank is not aware and has nothing to do with repudiation of the claim by the insurance company. The lawyer notice was promptly replied. The bank is neither liable nor responsible to pay any amount including compensation to the complainant as claimed. With the above contentions, the third opposite party also prays for dismissal of the complaint.
11. The points that arise for determination in this complaint are;

   (1). Whether there was any deficiency of service on the part of the opposite parties, as alleged?

              (2) Reliefs and costs

12. Evidence consists of the oral evidence of PW1 and Exts A1 to A7 on the side of the complainant. RW1 was examined and Exts B1 to B3 were marked on the side of the third opposite party. Exts. B4 and B5 were marked on the side of the first opposite party.
13. Heard.  The complainant and third opposite party filed brief argument notes.
14. Point No. 1:  The complainant has approached this Commission with the grievance that the claim put in by her in connection with the treatment of her husband was repudiated by the insurance company without valid reason.
15. The complainant and her husband Ibrahim Kutty were the account holders of the third opposite party bank. They were the holders of Punjab National Bank – Oriental Medi Claim Policy of the first opposite party. It was a group health insurance product policy for bank account holders of Punjab National Bank only. According to the complainant, the third opposite party bank was deducting the yearly premium in time from their account. The bank had deducted a premium amount of Rs. 7,320/-  on 2/09/2019 for the period of insurance covering from 3/09/2010 to 2/09/2020. The premium due date was 03/09/2020. The complainant alleges that the bank omitted to deduct the premium amount on 3/09/2020 and instead the premium amount was deducted from their account only on 7/10/2020. In the meanwhile, the complainant’s husband Ibrahimkutty was tested Covid 19 positive on 3/10/2020 and was in the hospital till 12/10/2020 and he succumbed to death.  The complainant was also laid up and was under quarantine in her house. The total hospital expenses amounted to Rs. 5,48,000/-. According to the complainant, the treatment expenses ought to have been reimbursed to her to the limit of Rs. 3,00,000/- since the sum insured was Rs. 3,00,000/-. The grievance of the complainant is that the claim was repudiated by the insurance company without valid reason.
16. In order to substantiate her case, the complainant has got herself examined as PW1, who has filed proof affidavit and deposed in terms of averments in the complaint and in support of the claim. Ext A1 is the Punjab National bank Oriental Medi Claim Policy 2017, Ext A2 is the patient bill (details) of Aster Mims Hospital, Kozhikode, Ext A3 is the death certificate of Ibrahim Kutty, Ext A4 is the copy of lawyer notice dated 18/01/2021 and Exts A5 to A7 are the postal acknowledgment cards.
17. The case advanced by the insurance company is that the claim was repudiated because of the non-disclosure of material facts and 30 days waiting period exclusion under the terms and conditions of the policy.   Their case is that the original policy expired on 2/09/2020 and the policy was not renewed within 30 days grace period. A new policy was issued covering the period from 7/10/2020 to 6/10/2021 (Ext A1) for the premium obtained on 7/10/2020. The earlier policy elapsed since the premium was not paid within the grace period and so Ext A1 cannot be treated as a continuation of the earlier policy. On 7/10/2020, while taking the policy, insured was admitted in the hospital for treatment of Covid 19. This fact was supressed at the time of taking the policy. The contention of the insurance company is that expenses relating to treatment of any illness within 30 days from the first policy commencement date shall be excluded except claim arising due to an accident. There was no oral evidence on the part of the Insurance Company. Ext. B4 is the copy of the policy with terms and conditions and Ext. B5 is the copy reply notice dated 09/02/2021.
18. The stand taken by the third opposite party bank is that they could only transfer  the amount to the concerned insurance company upon the request of the account holders and until and unless an instruction is received they cannot deduct the premium from the Savings Bank Account. On receipt of instruction on 7/10/2020, the bank transferred the amount from their account and the insurance company renewed the policy. The manager of the bank was examined as RW1. RW1 has filed proof affidavit and deposed supporting the contentions in the written version. Ext B1 is the bank account statement for the period from 01/04/2020 to 31/12/2020, Ext B2 is the copy of the transfer voucher dated 7/10/2020 and Ext B3 is the details of the account number, IFSC code etc. of the Oriental Insurance Company in the Canara Bank.
19. The complainant has alleged deficiency of service on the part of the first and third opposite parties. The specific allegation against the first opposite party is that the claim preferred by her in connection with the treatment of her husband was repudiated without valid reason. The allegation against the third opposite party is that there was neglect on their part to deduct the premium amount on 3/09/2020 from the account as per the scheme.
20. We shall first consider the allegation against the bank. According to the complainant, it is for the bank to deduct the yearly premium well within time from the account of the complainant and her husband and transfer to the insurance company. But this is denied by the bank. According to the bank, they could transfer the amount to the concerned insurance company only up on request of the account holder to transfer the specific amount from their account. RW1 has deposed that on 7/10/2020 on receiving instruction from the complainant, they transferred the amount from their account to the insurance company. The complainant has no case that neither herself nor her husband had given standing instruction to the bank in this regard. Moreover, a perusal of Ext B1 bank statement pertaining to the SB account of the complainant and her husband in the third opposite party bank shows that as on 3/09/2020 the credit balance was only 5,943.96. The premium amount to be remitted on that date was Rs. 7,685/-. So there was no sufficient balance in the account to transfer the premium amount on 3/09/2020. In view of Ext B1, the case of the complainant that there was sufficient balance in their SB account for remitting the insurance premium on the relevant date cannot be accepted. Further it is seen from Ext B1 that on 7/10/2020 an amount of Rs. 2,000/- was deposited in the account  and on that date itself premium amount of Rs. 7,685/-  was transferred to the account of the insurance company. It is crystal clear that as on 3/09/2020 there was no sufficient balance in the account to transfer the premium amount to the insurance Company. This has been deposed by RW1 also. As long as there was no sufficient balance in the account, the bank cannot be blamed for not deducting the premium amount on 3/09/2020, even if it is taken that it was for the bank to deduct the premium from their account. That being the position, no deficiency of service can be attributed against the bank. The third opposite party bank is entitled to be exonerated.
21. Now coming to the allegation against the insurance company, the premium was remitted only on 7/10/2020 and Ext A1 policy was issued only on that date. The earlier policy coverage was from 3/09/2019 to 2/09/2020 and renewal of the policy was to be made by remitting the premium before 3/09/2020. The first opposite party has admitted that  in the event of delay in renewing the policy, 30 days grace period is there for renewing the policy on certain conditions. As per clause 7 (ii) of the conditions of the policy, in the event of delay in renewal of the policy, a grace period of 30 days is allowed. However, no coverage shall be available during the grace period and any disease/injury contracted during the break period shall not be covered and shall be treated as pre-existing disease  under the renewed policy. In this case, it may be noted that the new policy (Ext A1) covering the period from 7/10/2020 to 6/10/2021 was issued for which the premium was received only on 7/10/2020. The premium was not paid within 30 days grace period and therefore Ext A1 cannot be treated as continuation of the earlier policy, as rightly contended by the insurance company.
22. Admittedly, at the time of issuance of Ext A1 policy on 7/10/2020 Sri. Ibrahim Kutty was suffering from Covid 19 and was under  treatment in the hospital. As per exclusion clause (Excl 01) of Ext B1 the expenses related to treatment of pre-existing disease and its direct complications shall be excluded until the expiry of 48 months of continuous coverage after the date of inception of the first policy with the insurer or its reinstatement. As per Excl 03, the expenses related to the treatment of any illness with in 30 days from the first  policy commencement date shall be excluded, except claims arising due to an accident. As on 7/10/2020 while Ext A1 policy was taken, Sri. Ibrahim Kutty was admitted in the hospital for the treatment of Covid 19.
23. The case of the first opposite party is that the new policy was obtained supressing the material fact regarding the illness of the insured and if the complainant had disclosed the real facts, the company would not have issued the new policy. The Hon’ble  Apex Court in 2021 (0) Supreme (SC) 779 - (Manmohan  Nanda V/s United India Insurance Company Limited)  has observed as follows; (paragraph 52)

     “On a consideration of the aforesaid judgments, the following principles would emerge:

     (!). There is a duty or obligation of disclosure by the insured regarding any material fact at the time of making the proposal.  What constitutes a material fact would depend upon the nature of the insurance policy to be taken, the risk to be covered, as well as the queries that are raised in the proposal form.

 (!!). What may be a material fact in a case would also depend upon the health and medical condition of the proposer.

(!!!). If specific queries are made in a proposal form then it is expected that specific answers are given by the insured who is bound by the duty to disclose all material facts.

(!!!!). If any query or column in a proposal form is left blank then the insurance company must ask the insured to fill it up. If in spite of any column being left blank, the insurance company accepts the premium and issues a policy, it cannot at a later stage, when a claim is made under the policy, say that there was a suppression or non-disclosure of a material fact, and seek to repudiate the claim.

(v). The insurance company has the right to seek details regarding medical condition, if any, of the proposed by getting the  proposer examined by  one of its empanelled doctors. If, on the consideration of the medical report, the insurance company is satisfied about the medical condition of the proposer and that there is no risk of pre-existing illness, and on such satisfaction it has issued the policy, it cannot thereafter, contend that there was a possible pre-existing illness or sickness which has led to the claim being made by the insured and for that reason repudiate the claim.

 (vi). The insurer must be able to assess the likely risks that may arise from the status of health and existing disease, if any, disclosed by the insured in the proposal form before issuing the insurance policy. Once the policy has been issued after assessing the medical condition of the insured, the insurer cannot repudiate the claim by citing an existing medical condition which was disclosed by the insured in the proposal form, which condition has led to a particular risk in respect of which the claim has been made by the insured.

(vii). In other words, a prudent insurer has  to gauge  the possible risk that the policy would have to cover and accordingly decide to either accept the proposal form and issue a policy or decline to do so. Such an exercise is dependent on the queries made in the proposal form and the answer to the said queries given by the proposer.”

24. In this context, it is worthwhile to have a glance at the decision of the   Hon’ble National Consumer Disputes Redressal Commission in Arum  Kumar vs. New India Assurance Company Ltd., reported in III (2017) (CPJ) 553 (NC) wherein it has been held as follows: “It is not denied that the complainant has been taking the insurance policy since the year 1997. It was the bound duty of the Insurance Company to have verified the information given in the proposal form by obtaining the suitable expert opinion. In case certain column in the proposal form were left blank, it was obligatory on the Insurance Company to ask him to fill the required information, before taking decision to issue the insurance policy. It is a matter of grave concern that the Insurance Companies,  whether in the public sector or the private sector, do not make any effort to examine the proposal properly or get the necessary verification done, at the time of issuing the policies in question. However, when the claims are filed, minute scrutiny starts at that stage and the claims are repudiated, even for minor lapses on the part of the proposer. In the present case, the discharge summary of Sitaram Bharatiya Hospital stated that the complainant had difficulty in walking for a long time and history of borderline hypertension, but not on any medication. The District Forum had rightly observed that non-disclosure of such conditions in the proposal form cannot be blown out of proportion, so as to disentitle the complainant from the claim amount from the Insurance Company. We have no reason to differ with the conclusion arrived at by the State Commission, because the conditions so mentioned in the report of the hospital, do not imply that the complainant was suffering from any serious disease. It is held, therefore, that the claim has been wrongly repudiated by the Insurance Company on the ground of non-disclosure of information about the health conditions in the proposal form.”
25. The proposal form is not produced by the first opposite party to verify whether there was any suppression of material facts as alleged. Without verifying the proposal form, one cannot come to a conclusion that the insured had suppressed his existing medical conditions or the fact of hospitalization. The proposal form is the basis of the contract of Insurance and it is in the custody of the first opposite party. This important document, which is the basis of the contentions of the first opposite party, is not produced before this Commission to examine the questions in the proposal form relating to the existing disease and what answers were given by the proposer.  The first opposite party failed to show any evidence that any medical test or examination was done before issuing the policy in question. The first opposite party could have satisfied about the medical condition of the insured by getting him examined by their empanelled doctors. It is clear that the first opposite party, while issuing the new insurance policy, has not enquired about the medical status of the insured or about his pre existing medical conditions.  The Insurance Company cannot now contend that at the time of issuance of the policy there was suppression of material facts regarding illness.
26. From the above discussion, what emerges is that the claim was wrongly repudiated by the first opposite party. Their act in wrongly repudiating the claim and thereby denying the legitimate claim amounts to gross deficiency of service. Ext A1 policy was issued by the insurance company while the insured was in the hospital. The hospitalization period was from 03/10/2020 to 12/10/2020. The policy is valid from 07/10/2020 15.30 hours to midnight of  06/10/2021. The total sum insured is Rs. 3,00,000/-. The complainant is entitled to get the medical expenses of her spouse Ibrahim Kutty for his treatment for the period of the policy ie. from 07/10/2020 15.30 hours to 12/10/2020. The treatment expenses from 07/10/2020 15.30 hours to 12/10/2020 is Rs. 3,64,448/-. The sum insured is Rs. 3,00,000/-. Therefore the complainant is entitled to get Rs. 3,00,000/- towards the treatment expenses of her spouse Ibrahim Kutty, from the first opposite party. It goes without saying that the act of the Insurance Company has caused mental agony and hardship to the complainant and she is entitled to be compensated adequately. Considering the entire facts and circumstances, we are of the view that a sum of Rs. 10,000/- will be reasonable compensation in this case. The complainant is also entitled to get Rs. 5,000/- as cost of the proceedings. 
27. Point No. 2:- In the light of the finding on the above point, the complaint is disposed of as follows;

                  a)  CC.98/2021is allowed in part.

b) The first opposite party is hereby directed to pay the complainant a sum of Rs.3,00,000/- (Rupees three  lakh only) with interest @ 6%  per annum from the date of the complaint ie. 02/07/2021 till actual payment.

c) The first opposite party is directed to pay a sum of Rs. 10,000/-(Rupees ten Thousand only) to the complainant as compensation for the mental agony and hardship suffered.

d) The first opposite party is directed to pay a sum of Rs. 5,000/- (Rupees Five Thousand only) as cost of the proceedings to the complainant.

 e) The order shall be complied with within 30 days of the receipt of copy of this order.

Pronounced in open Commission on this, the 30^th day of  November, 2023.

Date of Filing: 02/07/2021      

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Exhibits for the Complainant :

Ext.A1 – Punjab National bank Oriental Medi Claim Policy 2017.

Ext.A2 – Patient bill (details) of Aster Mims Hospital, Kozhikode.

Ext.A3 – Death certificate of Ibrahim Kutty.

Ext.A4 – Copy of lawyer notice dated 18/01/2021.

Ext.A5 – Postal acknowledgment cards.

Ext.A6 – Postal acknowledgment cards.

Ext.A7 – Postal acknowledgment cards.

Exhibits for the Opposite Party

Ext.B1 - Bank account statement for the period from 01/04/2020 to 31/12/2020.

Ext.B2 - Copy of the transfer voucher dated 7/10/2020

Ext.B3 - Details of the account number, IFSC code etc. of the Oriental Insurance Company in the Canara Bank.

Ext.B4 – Copy of the policy with terms and conditions

Ext.B5 - Copy reply notice dated 09/02/2021.

Witnesses for the Complainant

PW1 – Ayisha Beevi. K, (Complainant)

Witnesses for the opposite parties 

RW1 - Priyadarshini

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True Copy,

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