Chandigarh

StateCommission

A/222/2023

KOTAK MOHINDRA LIFE INSURANCE CO. LTD. - Complainant(s)

Versus

VEENA WIDOW OF LATE SH. RAJEEV KUMAR - Opp.Party(s)

DR. PUNEET KAUR SEKHON

14 May 2024

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

 

 

Appeal No.	:	222 of 2023
Date of Institution	:	05.09.2023
Date of Decision	:	14.05.2024

 

1. Kotak Mahindra Life Insurance Company Limited, 2^nd Floor, Plot #C-12, G-Block, BKC, Bandra (E), Mumbai-400051.
2. Kotak Mahindra Life Insurance Company Limited having its Branch Office at SCO No.141-142, Sector 9-C, Chandigarh through its Branch Manager

Both 1 & 2 through their authorized signatory.

 

…..Appellants/Opposite Parties No.1 & 2.

 

VERSUS

1. Veena widow of late Sh. Rajeev Kumar r/o H.No.1081/A, Dashmesh Nagar, Nayagaon, District SAS Nagar, Mohali, Punjab.

 

                                                                             …..Respondent/Complainant

2. Kotak Mahindra Prime Limited, having its Branch Office at Plot No.57, 6^th Floor, Phase-I, Industrial Area, Chandigarh through its Branch Manager.

 

…..Respondent/Opposite Party No.3.

 

BEFORE:    JUSTICE RAJ SHEKHAR ATTRI, PRESIDENT.

                   MR. RAJESH K. ARYA, MEMBER.

 

ARGUED BY:

Sh. Mrigank Sharma, Advocate for the appellants (on V.C.)

None for respondent No.1

Sh. Sukhbir Singh Sawhney, Advocate for the respondent No.2.

 

PER RAJESH  K. ARYA, MEMBER

 

ORDER

         

                   By filing the present appeal, Opposite Parties No.1 & 2 have assailed order dated 03.07.2023 passed by District Consumer Disputes Redressal Commission-I, U.T., Chandigarh (in short District Commission) partly allowing the complaint of the complainant (respondent No.1 herein) in the following manner:-

“4. In the light of the aforesaid discussion, the present consumer complaint succeeds, the same is hereby partly allowed and OPs 1 & 2 are directed as under :-

1. to pay ₹3,87,750/- to the complainant alongwith interest @ 9% per annum from the date of repudiation of the claim i.e. 19.7.2021, till realization of the same.  
2. to pay an amount of ₹20,000/- to the complainant as compensation for causing mental agony and harassment to her;
3. to pay ₹10,000/- to the complainant as costs of litigation.

However, it is made clear that the financier (OP-3) shall have first charge over the aforesaid awarded amount, to the extent the same is due to be paid by the complainant towards the discharge of loan liability, if any, of the deceased/insured.

5.   This order be complied with by OPs 1 & 2 within thirty days from the date of receipt of its certified copy, failing which, they shall make the payment of the amounts mentioned at Sr.No.(i) & (ii) above, with interest @ 12% per annum from the date of this order, till realization, apart from compliance of direction at Sr.No.(iii) above.

2. However, the consumer complaint was dismissed against Opposite party No.3 (respondent No.2 herein).
3. The facts in brief as narrated in the impugned order by the District Commission reads thus;

         “The present consumer complaint has been filed by Veena,      complainant against the aforesaid opposite parties (hereinafter referred to as the OPs). Brief facts of the case are as under :-

1. It transpires from the allegations as projected in the consumer complaint that on 31.8.2020, husband of the complainant namely late Sh. Rajeev Kumar had purchased a car make Kia Seltos from Joshi Ventures Private Limited, Chandigarh by getting the same financed from OP-3, by taking loan of ₹9,10,732/-. At the time of purchase of the subject car, husband of the complainant was allured by the officials of OPs to purchase a health insurance policy and accordingly he purchased the same namely Kotak Complete Cover Group Plan (hereinafter referred to as “subject policy”) by paying single premium of ₹5,381/- covering the risk of ₹4.00 lacs.  At the time of receiving the premium, except the certificate of insurance (Annexure C-1), no other document was issued to the husband of the complainant by the OPs.  Unfortunately, husband of the complainant died on 26.12.2020 and immediately a claim was lodged by the complainant, being his nominee, with OPs 1 & 2.  It was assured to the complainant that the claim amount will be paid to her within a period of one month by the OPs.  However, the complainant was shocked to receive repudiation letter dated 19.7.2021 (Annexure C-3) from OPs 1 & 2 declining the claim on the ground that the insured had declared that he had never suffered from any serious disease. The complainant approached the office of OP-2 at Chandigarh several times with the request to clear her genuine claim, but, with no result, rather the OPs started hurling threats to the complainant that they will take forcible possession of her car in default of loan payment. As per the terms & conditions of insurance policy issued by OP-2, OPs were fully liable to reimburse the whole claim amount on account of death of the insured/husband of the complainant and as they have wrongly repudiated the claim of the complainant, the same amounts to deficiency in service and unfair trade practice on their part. OPs were requested several times to admit the claim, but, with no result.  Hence, the present consumer complaint.
2. OPs resisted the consumer complaint and filed their separate written versions.
3. In their written version, OPs 1 & 2, inter alia, took preliminary objections of maintainability and cause of action.  It is admitted that the answering OPs had entered into a contract of insurance under the group policy and as per the subject policy, a group of members, as specified by the policyholder, availing any loan from the policyholder for specific purposes, as specified in the schedule of the policy contract, may be covered by the answering OPs for the period and the amount as specified in the certificate of insurance.  It is further alleged that member has to provide a duly signed declaration of good health thereby assuring the insurer that the member is medically fit for availing the said insurance cover and in the form provided to the insured late Sh.Rajeev Kumar, he had given declaration that he is medically fit to avail the said policy and was not suffering from any ailments/diseases and intended to be covered under the group insurance policy in question.  However, later on, when it was found that the deceased/insured had deliberately failed to disclose that he was suffering from coronary artery disease, diabetes and hypertension prior to obtaining the subject policy and he passed away within three months and 25 days of the commencement of the life cover, the claim was of the complainant was rightly repudiated.  On merits, the facts as stated in the preliminary objections have been reiterated. The cause of action set up by the complainant is denied.  The consumer complaint is sought to be contested.
4. In its written version OP-3, inter alia, took preliminary objections of maintainability, cause of action and concealment of facts. On merits, denied that the answering OP allured the insured to purchase the health insurance policy from OPs 1 & 2, rather it was exclusively the contract between the complainant and OPs 1 & 2.  It is further alleged that the complainant has no cause of action against the answering OP. The cause of action set up by the complainant is denied.  The consumer complaint is sought to be contested.”

4. The ground to lay challenge to the order of the District Commission is that had the information been disclosed at the time of availing the cover, the subject cover would not have been granted at all to respondent No.1/complainant by the appellants. It is further stated that the finding of the District Commission that amount of insurance shall be paid to respondent No.2 and then the remaining amount be paid to respondent No.1 is totally against the appellants who are custodian of public funds. It has further been stated that the answers given by respondent No.1 in Declaration of Good Health form were untrue and there were clear suppression of material fact in regard to the health of the insured. In support of their contentions, the appellants placed reliance on the judgment of the Hon’ble Supreme Court in Satwant Kaur Sandhu Vs. New India Assurance Company, 2009(8) SCC 316. Further reliance is placed on the judgment of Hon’ble National Consumer Disputes Redressal Commission, New Delhi in case LIC of India and Others Vs. Shakuntla Devi and Anr., 2012 (2) CPC 368  wherein it has been held that the claim arising out of contract into which the insurer was led to enter by suppressing all material facts and by non performance of the obligations on the part of life assured is a void contract. It has further been stated that prescription issued by Help Hospital would show that deceased husband of the complainant was suffering from hypertension for last six years and was taking Telma-H per day. Lastly prayer for setting aside the impugned order has been made by the appellants.
5. Per contra, appeal has been defended by respondent No.1 stating that non-disclosing of insured being a patient of hypertension/diabetes does not amount to suppression of material facts, the same being a life style disease, so as to entitle the insurer to repudiate the claim as has been held by Hon’ble High Court of Punjab and Haryana in case Veena Sharma Vs. Life Corporation of India, 1999(1) RCR (Civil) 642. Further, it has been stated that when a policy is issued to the insured, prior investigations regarding health of the insured are duly done by the insurance company, but no such investigation record was produced by the appellants before the District Commission. In support of this contention, reliance has been placed on Bajaj Allianz Life Insurance Co. Ltd. & Ors. Vs. Raj Kumar, III (2014) CPJ 221 (NC). Lastly prayer for dismissal of appeal has been made by respondent No.1.
6. After hearing the rival contention of the parties and going through the material available on record and the written arguments very carefully and also the impugned order, we are of the concerted view that the present appeal is liable to be dismissed for the reasons to be recorded hereinafter. It may be stated here that in light of the facts presented, it is evident that the core issue of contention between the parties revolves around the terms and conditions of the insurance policy and the medical history of the deceased. The policy, as outlined in Annexure C-1, provided coverage for the insured up to ₹4.00 lacs from 08.11.2020, to 09.01.2025. The Member Form-cum-Declaration of Good Health
   (Annexure R-1) indicates that the insured declared good health at the time of purchasing the policy, including disclosure regarding high blood pressure, diabetes, and lung disease etc. Furthermore, Annexure R-2, the policy schedule, delineates the benefits of the policy, specifying that in the event of the member's death during the cover term while the policy is in force, the insured benefit shall be payable in lump sum and the cover shall cease. Notably and as has rightly been observed by District Commission, Clause 1(c) indicates that no riders are available under the policy, and in the unfortunate circumstance of death due to suicide within 12 months from the commencement of risk, the nominee or beneficiary shall be entitled to 80% of the total premium paid till the date of death or the surrender value available as of the date of death. Given these provisions, it is evident that the insured benefits are applicable in the event of the member's death during the cover term, and since it is acknowledged by both parties that the policy was valid at the time of the insured's death, respondent No.1 claim fell within the coverage of the policy due to the death of the insured (the complainant's deceased husband). The opposition from the appellants centers on the assertion that the deceased insured concealed pre-existing conditions such as hypertension, diabetes, and coronary artery disease in their declaration. This resistance formed the sole ground for denying respondent No.1’s claim.
7. In light of these arguments, it's imperative to carefully examine the evidence and ascertain whether the alleged concealment of
   pre-existing conditions by the insured indeed constituted a valid ground for denying the claim under the terms of the policy. The arguments put forth by both parties highlight a crucial legal debate regarding the impact of the insured's disclosure or non-disclosure of pre-existing conditions on the insurer's liability under the policy. On behalf of the appellants, it is contended that if the insured concealed material facts regarding
   pre-existing diseases and provided false declarations before purchasing the policy, the insurer could not be held liable. This contention draws upon established legal precedents which emphasize that the insurer must provide cogent evidence to prove that the insured suppressed information about their illness, as demonstrated in the case of P. Vankat Naidu Vs. Life Insurance Corporation of India & Anr. IV (2011) CPJ 6 (SC) Conversely, the complainant relied on legal precedents such as S.S. Jaspal Vs. National Insurance Co. Ltd. & Ors., IV (2022) CPJ 26 (Del.) and Sunil Kumar Sharma v. Tata AIG Life Insurance Company and Ors., Revision Petition No.3557 of 2013 decided on 01.03.2021 by Hon’ble National Consumer Disputes Redressal Commission, New Delhi  which assert that the burden of proof lies with the insurer to demonstrate that the insured withheld information about their pre-existing condition. These judgments underscore that common lifestyle diseases like diabetes and hypertension cannot be grounds for repudiating a claim, especially when there is no concrete evidence to support the insurer's allegations of suppression. Examining the evidence presented, the District Commission rightly noted that the deceased insured was never admitted or treated for the alleged pre-existing diseases prior to purchasing the insurance policy. Additionally, the appellants failed to produce tangible evidence proving that the insured withheld information about his hospitalization and treatment. Considering these factors and the legal principles established in the aforementioned judgments, it is established that the insured did not conceal information regarding diseases that were otherwise required to be disclosed, except for the known conditions of hypertension and diabetes, which are commonly categorized as lifestyle diseases. Further the contention of the appellants that the finding of the District Commission that amount of insurance shall be paid to respondent No.2 and then the remaining amount be paid to respondent No.1 is totally against the appellants who are custodian of public funds, is not acceptable in the light of clear cut clauses of the coverage of insurance. In light of the legal precedents and the absence of substantial evidence provided by the appellants, the District Commission rightly held the repudiation to be deficiency in service on the part of the appellants.
8. In view of the above discussion, it is held that the order impugned passed by the District Commission partly allowing the consumer complaint filed by respondent No.1/complainant, being based on the correct appreciation of evidence and law on the point, does not suffer from any illegality or perversity, warranting the interference of this Commission.
9. For the reasons recorded above, this appeal being devoid of merit, stands dismissed with no order as to cost.
10. Pending applications, if any, also stand dismissed.
11. Certified copies of this order be sent to the parties free of charge forthwith.
12. File be consigned to Record Room after completion.

Pronounced

14.05.2024

 

 [RAJ SHEKHAR ATTRI]

PRESIDENT

 

 

 

(RAJESH K. ARYA)

 MEMBER

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