Bangalore District Court
) National Insurance Company Limited vs ) Mr.Moraje Srinivas Vittal Rau on 7 November, 2018
IN THE COURT OF THE VI ADDL.CITY CIVIL & SESSIONS JUDGE
BENGALURU CITY
CCCH. 11
Dated this the 7th day of November, 2018
PRESENT: Sri.Rama Naik, B.Com., LL.B.,
VI Addl.City Civil & Sessions Judge,
Bengaluru City.
A.S.NO:55/2013
PLAINTIFFS/ : 1) National Insurance Company Limited
APPLICANTS No.3, Middleton Street,
Post Box 9229, KOLKATA-700 001.
2) National Insurance Company Limited
Division III, Sri Lakshmi Complex,
15-17-19, St.Marks Road,
Bengaluru-560 001.
Both Plaintiffs represented by its
Deputy Manager-
Mrs.Sulochanadevi Elangovan
[By Pleader M/s.LEXplexus]
/Vs/
DEFENDANTS/ : 1) Mr.Moraje Srinivas Vittal Rau,
RESPONDENTS "Thapan", 56-3, Nandidurg Road,
Bengaluru-560 046.
[By Pleader Ms.Chetana.K]
2) Mr.S.Anantha Murthy,
Sole Arbitrator,
District Judge (Retd.)
No.561/1, 7th 'B' Main Road,
HAL 2nd Stage, Bengaluru-560 008.
[Arbitrator]
AS.55/2013
2
JUDGMENT
The Plaintiff has filed this suit under Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside the arbitral award dated 06.05.2013 passed by Defendant No.2/Sole Arbitrator.
2) In brief the Plaintiffs case are that, they issued an Overseas Medi Claim Policy dated 17.12.2008 on a proposal made by the 1st Defendant. The 1st Defendant traveled from India to New Jersey, U.S.A. on 22.12.2008. On 01.01.2009, he was admitted to the Valley Hospital, Ridgewood, New Jersey, U.S.A in an emergency, semi- conscious state and he was diagnosed having Subdural Hematoma. A burr hole evacuation surgery was conducted on 02.01.2009. Since the 1 st Defendant could not be weaned out of the ventilator, an emergency quadruple bypass surgery was done on 13.01.2009 and he was subsequently discharged from the hospital on 23.01.2009. The hospital raised bills amounting to $ USD 3,86,755 towards the cost of the treatment. The Plaintiff rejected the claim and repudiated the policy on the AS.55/2013 3 ground of "pre-existing disease". Being aggrieved by the repudiation of the policy of insurance, the 1st Defendant initiated arbitration proceeding against the Plaintiffs, wherein, both the parties filed their respective pleadings before the Arbitral Tribunal, adduced evidence and the witnesses were also examined by either side. The 2 nd Defendant after hearing the arguments, by its award dated 06.05.2013 partly allowed the claim of the 1 st Defendant. Being aggrieved by the said award, the Plaintiffs have approached this Court on the following among other grounds.
(1) The arbitral award is contrary to settled principles of law and facts and circumstances of the case.
(2) The Arbitral Tribunal erred in not appreciating in proper perspective the fact that the 1st Defendant was admittedly taking treatment for 'angina' a severe coronary artery disease and the medication being taken for the same was one of the causes for the occurrence of Subdural Hematoma.
AS.55/2013 4 (3) The arbitral award directing the Plaintiffs to pay the claim of the 1st Defendant for the Quadruple bypass Surgery is erroneous when the policy of insurance issued by the Plaintiffs contained a specific exclusion clause for "heart and circulatory disorders".
(4) The Arbitral Tribunal erred in holding that the Plaintiffs "accepted the medical report" of the 1st Defendant and issued Policy of Insurance. It was based on the medical report that treatment arising from 'heart and circulatory disorders' were excluded under the policy issued to the 1st Defendant.
(5) The Arbitral Tribunal erred in holding that the Claimant/1st Defendant had honestly disclosed the condition of his health and medicine he was taking. Its finding is contrary to the material on record as in the proposal form Ex.R-3. It is clear that the 1 st Defendant had not disclosed either his health condition or the medicines he was taking or the history of 'Angina' he was suffering from.
(6) The Arbitral Tribunal erred in holding that 'the 1st Defendant was using aspirin with the brand name 'Eco Sprin 75' and 'Plavix' for 30 AS.55/2013 5 years and no occasion arose for him to undergo a bypass surgery earlier to the one on hand. It is difficult to conclude that it was because of this coronary condition only quadruple surgery on him was done' The Arbitral Tribunal has over looked the fact that apart from 'Aspirin' and 'Plavix', he was also taking medication like "Isordil" for Angina which is a severe coronary condition which led to the quadruple bypass surgery.
(7) The Arbitral Tribunal has erred in over looking Clause 10(b) and (c) of the General Terms of Overseas Medical Policy which specifically excludes pre-existing conditions for which advice was sought or medical treatment was taken in the preceding 12 months prior to the commencement of travel. The Arbitral Tribunal has overlooked the fact that the medication for Angina like "Isordil" was a medical treatment he was on for the past 30 years and has not disclosed the same in the medical reports to be attached with the policy. (8) The Arbitral Tribunal has erred in not noticing the fact that the Plaintiffs had adduced positive evidence to indicate that the medication being taken by the 1st Defendant AS.55/2013 6 was one of the causes for occurrence of Subdural Hematoma.
(9) The Arbitral Tribunal has erred in mis- appreciating the facts coming to the conclusion that 'Therefore there can be no doubt that the Claimant had severe coronary artery disease but there is absolutely no material to believe that he was admitted to the hospital for the treatment of the disease much less for Bypass Surgery". Having regard to the admitted fact that the 1st Defendant was on medication/treatment for Angina for nearly 30 years, but for the heart condition of the 1 st Defendant there would have been no necessity for the bypass surgery to be conducted and the 1st Defendant could have easily been weaned off the ventilator.
(10) The Arbitral Tribunal has erred in allowing the claim made by the 1st Defendant as subsequent to the issue of the medical bills by the hospital at U.S.A., there was absolutely no demand or communication from them for payment of the said bills.
(11) The Arbitral Tribunal having concluded that "there can be no doubt at all that the 1st AS.55/2013 7 Defendant had severe Coronary Artery disease ought to have dismissed the claim of the 1 st Defendant.
(12) The Arbitral Tribunal erred in directing the Plaintiffs to pay interest at 18% p.a., and costs to the 1st Defendant.
(13) The award passed by the Arbitral Tribunal is otherwise illegal, contrary to law and suffers from serious illegal and factual infirmities. For all these reasons and grounds, the Plaintiffs pray for allowing the suit.
3) After institution of the suit, the 1 st Defendant marked his appearance through his Advocate and filed written statement. The 1st Defendant in his written statement states that no grounds have been made out by the Plaintiffs to set aside the award under Section 34 of the Arbitration and Conciliation Act. The allegations in the plaint are that the findings of the Arbitrator are erroneous. The said section and Courts have specifically stated that erroneous findings cannot be subject to appeal under AS.55/2013 8 Section 34 of the Act. The Arbitral Tribunal has passed the award after hearing both the parties in length and after going through the facts of the case. The arbitral award is just, correct and well within settled principles of law. The 1st Defendant further states that the Plaintiffs have suppressed the evidence of Dr.Venkatesh and Dr.Suresh, Cardiologist and Neurologist. They have admitted in their evidence that medication being taken by the 1 st Defendant is not the cause for Subdural Hematoma and that if a person is taking medication he is said to be under controlled condition and cannot be called diseased. The 1st Defendant also states that Doctors deposed that medication taken by the 1 st Defendant would have been almost routinely prescribed by doctors to people of the age group which the 1st Defendant falls under. It is settled law that, when a policy is provided it should clearly enumerate what is pre-existing disease. The 1 st Defendant also states that the Plaintiffs' witness Mr.Kollipara Bharathi clearly stated that " We issue the policy after scrutinizing the duly filled up proposal form and annexures....... The AS.55/2013 9 premium is calculated on the basis of the age of the proponent. ...... the premium is higher for an aged person because the risk involved in the quality of his health cannot be compared with that of the person of younger age". In view of the evidence of Plaintiffs' witness, the Plaintiffs are wrong in their submission that the Arbitrator erred in coming to the conclusion that the Plaintiffs accepted the report. The 1st Defendant states that he had mentioned in the policy the list of medications that he is taking and also provided medical report, based on this, the premium was calculated. The 1 st Defendant did not have any disease within the preceding 12 months as required by the policy. The declaration of medication was made and the medical report was submitted. All these were taken into consideration by the Plaintiffs prior to fixing the premium. The Plaintiffs did not reject the claim made by the 1st Defendant on this ground. The 1st Defendant further states that expert witness, who is a Cardiologist in his cross-examination, has after examining Ex.C2, categorically admitted that "the discharge AS.55/2013 10 summary discloses that ..... the patient's cardiac condition was preventing him from being weaned and hence Bypass Surgery was done." This evidence shows that the surgery was done only to wean the 1 st Defendant from a ventilator and not because he had heart problem. The 1 st Defendant further states that, the Arbitral Tribunal has rightly interpreted Clause 10(c) of the General Policy as that a pre-existing condition as policy holder suffers from 12 months prior to taking the policy and not 30 years history. The 1st Defendant also states that he has not hidden any facts from the Plaintiffs while taking the overseas medi claim policy and has not adduced any positive evidence to get the arbitral award in his favour. The 1 st Defendant further states that once the invoice is raised, it is an obligation on the part of the Plaintiffs to clear that invoice as they need not again specifically ask to pay the bill, as invoice itself is a demand to make a payment on whom it is raised. The 1st Defendant also states that interest awarded by the Arbitral Tribunal is justified because the AS.55/2013 11 hospital till now has not recorded the bill. Hence, prays for dismissal of the suit.
4) Heard. Perused the pleadings and records placed in this case.
5) The points that arise for my consideration are :-
(1) Whether the Plaintiffs have made out any grounds in the plaint to set aside the award on the ground of Public Policy under Section 34(2)(b)(ii) of the Arbitration and Conciliation Act, 1996?
(2) What Order?
6) My answer to the above points are :-
Point No.1 - In the Affirmative Point No.2 - As per final order, for the following :
REASONS
7) Point No.1 : The Plaintiffs have challenged the impugned award dated 06.05.2013 passed by the Arbitral Tribunal/2nd Defendant, where-under the learned Arbitrator partly allowed the claim of the 1 st Defendant AS.55/2013 12 holding that the 1st Defendant is entitled for a sum of USD 3,86,755.00 and interest and costs.
The facts leading to the dispute are that, the 1 st Defendant insured under the Overseas Mediclaim Policy with the Plaintiffs. Proposal Form for Overseas Mediclaim Policy has been marked as Ex.D.3, Ex.D.3(a) and Ex.D.3(b). The Overseas Mediclaim Policy has been marked as Ex.C.1 and terms and conditions of Policy has been marked as Ex.C.6. The proposal for mediclaim policy was submitted on 17.12.2008. The period of policy was 60 days which started from 22.12.2008. During the subsistence of policy, the 1 st Defendant did visit New Jersey, USA on 22.12.2008, where his son, Mr.Abish Moraje resides. There he started to develop headache, nausea and vomiting. He was brought to Valley hospital, Ridgewood, New Jersey for treatment, where head CT was done and it revealed a right sided Subdural Hematoma. An emergent burr hole evacuation surgery was conducted on 02.01.2009 and thereafter, he was intubated for a period of 10 days, during which period, he developed AS.55/2013 13 complications like pneumonia and respiratory failure in the light of myocardial infarction. Owing to this, an emergency quadruple bypass surgery was done on 13.01.2009 and discharged from the said hospital on 21.01.2009. The Coris-America, which provides emergency assistance was informed about the hospitalization of the 1st Defendant. As the Coris- America denied to re-imburse the hospital bills on behalf of the Plaintiffs, the 1st Defendant addressed a letter dated 17.04.2009 to the Plaintiffs requesting to state the ground for denial of bills. Thereafter, a legal notice was issued to the Plaintiffs on 04.12.2009 to settle the claim of the 1 st Defendant and in the said notice, the 1 st Defendant also reserves his right to approach the Arbitrator to resolve the dispute, if the Plaintiffs denied to settle the claim. The 1 st Defendant approached the Hon'ble High Court of Karnataka for appointment of Arbitrator in CMP.No.54/2010 and the Hon'ble High Court was pleased to appoint Defendant No.2 as the sole Arbitrator to arbitrate the dispute between the parties. The learned AS.55/2013 14 Arbitrator was pleased to pass the impugned award dated 06.05.2013 which came to be challenged in this case.
8) Merits of arbitral award can be assailed only when it is in conflict with the "Public Policy of India."
The Hon'ble Supreme Court of India in Associate Builders Vs. Delhi Development Authority was pleased to hold that :
" None of the grounds contained in Section 34(2)(a) of the A&C Act, 1996 deal with the merits of the decision rendered by an arbitral award. It is only when the award is in conflict with the public policy of India as prescribed in Section34(2)(b)(ii) of the A&C Act, 1996 that the merits of an arbitral award are to be looked into under certain specified circumstances."
In this case it is the specific contention of the Plaintiff that the impugned award passed in contravention of principles of Public Policy of Indian Law. In the backdrop of the contention of the Plaintiff, it is indispensable to look into the merits of the arbitral award.
9) The main contention of the Plaintiffs is that, the Arbitral Tribunal failed to appreciate that the Plaintiffs had AS.55/2013 15 rightly repudiated the claim of the 1 st Defendant on the ground of pre-existing disease since the same was exclusively excluded from the Mediclaim Policy issued to the 1st Defendant, which formed a binding contract between the parties. The 1st Defendant's contention is that, surgery was done only to wean the 1 st Defendant from the ventilator and not because he had a heart condition; the Plaintiffs have deliberately ignored the fact that the medicines the 1st Defendant had taken for over 30 years was to prevent and control any heart conditions that may affect his normal day today life and hence, the Arbitral Tribunal has rightly passed the award in favour of the 1st Defendant.
10) After going through the rival contentions of the parties, it is relevant to mention Exs.C.2, C.3, C.4, C.5 and D.1, which were marked before the Arbitral Tribunal. These are the medical records of the 1st Defendant recorded by the Doctors of the Valley Hospital, New Jersey, USA.
AS.55/2013 16 " Ex.C.2 - HISTORY OF PRESENT ILLNESS : This is a 75-year-old man with a history of coronary artery disease and hypertension who traveled from India for a wedding in New Jersey....."
"Ex.C.3 - PAST MEDICAL HISTORY: Significant for some coronary artery disease. He is on a medication which is a combination of Plavix and aspirin as well as a medication for angina.
........................
ASSESSMENT/PLAN : This is a 75-year-old with a subacute chronic subdural hematoma, on Plavix and aspirin. Clearly the Plavix and aspirin should be stopped. We discussed the potential risk to his heart during the time the plavix will be held. However there is very limited choice regarding this issue. He should get platelets 1 unit every 6 hours for this 48 hours patient. He should be loaded with Dilantin and Dilantin should be continued. He needs an ICU admission with a strict neuro chicks to and he should be started on some 3% saline to bring his sodium back up to normal levels. He most likely will need surgery for this and risks of potential increasing mass effect was discussed with the family. He is awake and arousable and the most prudent thing would be to correct his coagulopathy and then proceed with the surgery. The family understands this, and he will be admitted to the intensive care unit."
"Ex.C.4 - PRE OPERATIVE DIAGNOSIS : Right-
sided subdural hematoma POST OPERATIVE DIAGNOSIS : Right-
sided subdural hematoma."
"Ex.C.5 -INTERAOPERATIVE FINDINGS : Severe coronary artery disease.
"Ex. D.1----- A 75 year-old man with a history of coronary artery disease, history of myocardial infarction about 30 years ago,..........."
AS.55/2013 17
11) On perusal of Exs.C.2 to C.5 and D.1, the following questions would arise :
(1) Whether the 1st Defendant was suffering from the pre-existing heart disease?
(2) Whether medications Plavix and Aspirin used as blood thinner to avoid potential risk to the heart of the 1st Defendant led to Subdural Hematoma?
12) First question regarding pre-existing disease:
It is an undisputed fact that the 1 st Defendant was treated by the Doctor at Mangalore in 1987 and he was taking 'Aspirin 75 mg' a day and '5 mg Isordil' twice a day.
This fact has been admitted by the 1st Defendant(Claimant) before the Arbitral Tribunal in his cross-examination by the Plaintiffs, which reads as follows :
" ... The witness adds that he was limited to Aspirin 75 mg a day and 5 mg isordil twice a day as prescribed by the doctor at Mangalore in 1987. (Note :
The documents noted earlier as discharge report and Consultation details are marked as Ex.C.2 and C3, Ex- C1 being the original Overseas Mediclaim Policy). It is true that as stated in Ex.C3 under past medical history that I was on medication which was a combination of Plavix and Aspirin as well as a medication for angina. When I went for medical consultation in the year 1987 I had high BP and it was AS.55/2013 18 brought under control by medication. As already stated by me the medicines I was taking were Isordil 5 mg twice a day and Aspirin, the brand name being Ecosprin 75.
Before I underwent the by-pass surgery on 13.1.2009 in US, I had not undergone any medical heart procedure. I see Ex.D1 shown to me now. (it is a copy of the medical report said to have been issued by Dr.Wanda Choy of the Valley Hospital, US), I don't dispute the correctness of the contents of this report. The history recorded discloses that I had coronary artery disease, myocardial infarction about 30 years ago, and hypertension. Those problems except the disclosure that I had those histories about 30 years back. It was not correct that I had those histories about 30 years earlier, (The witness says that his son might have stated so). It was in 1987 I had undergone consultation for the uneasiness that I was feeling. It was in Mangalore. Before I went to US and after my consultation with the Doctor at Mangalore, I was taking the two medicines already named by me."
13) This fact is also substantiated by documentary evidence i.e., medical records relating to the 1st Defendant recorded by Doctors of Valley Hospital, New Jersey, USA. Ex.C.3 and Ex.C.4 make it clear that the 1 st Defendant was taking medicine, which was a combination of 'Plavix' and 'Aspirin'. The 1 st Defendant neither disclosed the said fact in his claim statement and examination-in-chief affidavit filed before the Arbitral Tribunal nor in the statement of objection filed in this case.
The 1st Defendant disclosed the said fact only when he AS.55/2013 19 was cross-examined by the Plaintiffs before the Arbitral Tribunal. In fact, the 1st Defendant did conceal the fact of taking medicine right from the date, on which he submitted the Ex.C-D(a)-Proposal Form. The 1 st Defendant in his statement of objection has stated that the medicine he was taking for over 30 years was to prevent and control any heart condition that may affect his normal day-today life. The 1st Defendant does not admit the fact that he was taking medicines for the coronary artery disease. He tried to project it as heart condition. The 1 st Defendant has relied upon the deposition of R.3, who was examined before the Arbitral Tribunal by the Plaintiffs. R.3, in his cross-examination has deposed that " if a person is on preventive medicines one may not be able to conclude that he is suffering from a disease". On the basis of this part of evidence, the 1st Defendant justified his contention that he was taking medicines for over 30 years to prevent and control any heart condition. There is no rationale in the contention of the 1st Defendant. The Doctor can prescribe medicines or suggest surgery if a person suffers AS.55/2013 20 from heart disease, depends upon severity of the disease. One cannot say that a person having healthy heart is given medicines to prevent and control any heart condition. If the word "heart condition" is used, it indicates that the heart is not healthy. Under such circumstances, the medications are necessitated. The most reasonable evidence to say that the 1 st Defendant was suffering from heart disease is, medical records recorded by the Doctors who operated the 1 st Defendant. The medical records are marked as Exs.C.2 to C.5 and D.1. Exs.C.2 to Ex.C.5 and D.1 clearly establish the fact that the 1st Defendant was suffering from severe coronary artery disease. The particular portion of Ex.C.3 and Ex.C.5 is reproduced herewith :
" Ex.C.3 - PAST MEDICAL HISTORY: Significant for some coronary artery disease. He is on a medication which is a combination of Plavix and aspirin as well as a medication for angina."
Ex.C.5 ------ PRE-OPERATIVE DIAGNOSIS : 1.
Multivessel coronary artery disease.
2. Status post subdural hematoma.
3. Status post surgical decompression of the brain."
AS.55/2013 21 Hence, from the evidence of 1st Defendant and from the documentary evidence at Ex.C.3 and Ex.C.5 it is crystal clear that the 1st Defendant had pre-existing disease viz., coronary artery disease and he was taking medicines like 'Ecosprin 75', 'Plavix' and 'Isordil' for angina.
(2) Subdural Hematoma Before adverting to this question, it is necessary to reproduce the meaning of certain medical terminology .
"ANGINA : a sense of suffocation or suffocating pain.
See ANGINA PECTORIS, LUDWIG'S ANGINA.
'ANGINA PECTORIS' pain in the center of the chest, which is induced by exercise and relieved by rest and may spread to the jaws and arms. Angina pectoris occurs when the demand for blood by the heart exceeds the supply of the coronary arteries and it usually results from coronary artery atheroma. It may be prevented or relieved by such drugs as *glyceryl trinitrate and *beta blockers. If drug treatment proves ineffective, *coronary angioplasty or *coronary artery bypass grafts may be required, the former being less invasive than the latter.
'ANTICOAGULANT' an agent that prevents the clotting of blood. The natural anticoagulant *heparin directly interferes with blood clotting and is active both within the body and against a sample of blood in a test tube. Synthetic drugs, such as *warfarin, are effective only within the body, since they act by affecting blood coagulation factors. They take longer to act than heparin. Anticoagulants are used to prevent the formation of blood clots or to break up AS.55/2013 22 clots in blood vessels in such conditions as thrombosis and embolism. Incorrect dosage may result in haemorrhage.
'BUR HOLE (BURR HOLE) a circular hole drilled through the skull to release intracarnial tension (due to blood, pus, or cerebrospinal fluid) or to facilitate such procedures as needle aspiration or biopsy.
'CORNARY ARTERY DISEASE (CAD)' atheroscLerosis of the coronary arteries, which may cause angina pectoris and lead to myocardial infarction. One of the leading causes of death in Western countries, the disease occurs most frequently in population with diets high in cholesterol, saturated fats, and refined carbohydrates. Other risk factors include hypertension, diabetes mellitus, and smoking.
'HEMATOMA' an accumulation of blood within the tissues that clots to form a solid swelling. Injry, disease of the blood vessels or a clotting disorder of the blood are the usual causative factors. An intracranial haematoma causes symptoms by compressing the brain and by raising the pressure within the skull. A blunt injury to the head, especially the temple, may treat the middle meningeal artery, giving rise to a rapidly accumulating extradural haematoma requiring urgent surgical treatment. In elderly people a relatively slight head injury may tear the veins where they cross the space beneath the dura, giving rise to a subdural haematoma. Excellent results are obtained by surgical treatment. An intracerebral haematoma may be a consequence of severe head injury but is more often due to atheromatous disease of the cerebral arteries and high blood pressure resulting in bleeding into the brain."
14) The 1st Defendant submitted Proposal Form for Overseas Mediclaim Policy on 17.12.2008 and policy was issued on 22.12.2008. He traveled to New Jersey on AS.55/2013 23 22.12.2008. Ex.C.2 and Ex.C.3 reveal that he was rushed to the Valley Hospital, New Jersey, USA on 01.01.2009, since he developed nausea, vomiting and headache. The doctors diagnosed it as right sided Subdural Hematoma. The doctors recorded the past medical history of the 1 st Defendant in Ex.C.3, which reads as follows :
"Significant for some coronary artery disease. He is on a medication which is a combination of Plavix and aspirin as well as a medication for angina."
In the same Ex.C.3, the Doctors' assessment/plan has also been recorded, which reads as follows :
" ASSESSMENT/PLAN: This is a 75-year-old with a subacute chronic subdural hematoma, on Plavix and aspirin. Clearly the Plavix and aspirin should be stopped. We discussed the potential risk to his heart during the time the plavix will be held. However there is very limited choice regarding this issue. He should get platelets 1 unit every 6 hours for this 48 hours patient. He should be loaded with Dilantin and Dilantin should be continued. He needs an ICU admission with a strict neuro chicks to and he should be started on some 3% saline to bring his sodium back up to normal levels. He most likely will need surgery for this and risks of potential increasing mass effect was discussed with the family. He is awake and arousable and the most prudent thing would be to correct his coagulopathy and then proceed with the surgery. The family understands this, and he will be admitted to the intensive care unit."
15) The doctors specifically came to the conclusion after knowing the past medical history of the 1 st Defendant and AS.55/2013 24 after seeing the head CT that, it was the case of sub- acute chronic Subdural Hematoma on 'Plavix' and 'Aspirin' and decided to stop the 'Plavix' and 'Aspirin'. The Doctors also discussed the potential risk to the heart of the 1 st Defendant during the time the 'Plavix' will be held. However, there was no choice, the Doctors decided to stop the intake of 'Plavix' and 'Aspirin'.
R.W.3 in his examination-in-chief has specifically deposed that :
" ........The medical records of the claimant further indicate that he was on medications such as, "Isordil", "Plavix" and "Aspirin". The medications are "Anti Coagulant medication" which are commonly called Blood Thinners. The said medication itself increases the risk of subdural hematoma."
Hence, it is clear that 'Plavix' and 'Aspirin' work as blood thinners which are prescribed by the Doctors for angina.
16) The medication like 'Plavix' and 'Aspirin' are Anti Coagulant medicines and it is called as blood thinners. It is evidenced from the evidence of 1 st Defendant that, he was taking medicines like 'Plavix' and 'Aspirin' from the AS.55/2013 25 last 30 years constantly. The Doctors who treated the 1 st Defendant had come to the opinion that, 'Plavix' and 'Aspirin' should be stopped. The Doctors also knew the potential risk to the heart of the 1st Defendant during stoppage of 'Plavix' and 'Aspirin'. The 1 st Defendant has relied upon the evidence of R.W.3. R.W.3 in his cross- examination has deposed as follows :
" In case of the patient on the hand the blood thinner he was taking had probably no effect cause of normal bleeding parameters recorded during emergency admission."
The 1st Defendant has also relied upon the evidence of R.W.3 that "there are many causes for its occurrence. The commonest of them is an injury." It is not at all the case of the 1st Defendant that he had sustained any type of head injury. Moreover, R.W.3 in his evidence has deposed that "bleeding normally occurs in veins and therefore, it would be a slow development."
17) From the evidence of 1st Defendant and from Ex.C.3- Consultation Report recorded by the Doctors of Valley Hospital and also from the evidence of Neurologist-R.W.3, AS.55/2013 26 it can be said that, 'Plavix' and 'Aspirin' are the proximate cause for Subdural Hematoma.
The Arbitral Tribunal has come to the following conclusion regarding Subdural Hematoma.
a) Para 21(i)(a) : Page 10 of the impugned award: The witness replied that in the case of the claimant the blood thinner like Ecosprin 75 which he was taking, probably had no effect in the causing of bleeding because the normal bleeding parameters recorded by the Hospital in New Jersey during emergency admission were normal. He has fairly admitted in cross examination that if a person is on preventive medicines, one would not be able to conclude that he is suffering from a disease. Therefore, his evidence in no way helps the Respondents in establishing that the subdural hematoma was due to pre-existing health condition of the Claimant and the routine medicines like Ecosprin 75, Plavix etc, he was admittedly taking.
b) Para 21(i) (b); Page 11 of the impugned award :
Therefore, I am fully satisfied that the subdural hematoma the Claimant suffered and which required emergent admission to the Hospital after his arrival in New Jersey and on the following days had be to operated upon to drain out the haematoma was not due to any of his pre-existing health conditions as disclosed in the proposal form. It is also established in this case that before issuing the policy, Respondent No.2 required the Claimant to undergo medical examination, that it was so done by the Claimant in Mahaveer Jain Hospital in Bengaluru and Respondent No.2 never hesitated to accept that report and issue the policy. Therefore, the claim that subdural hematoma was not due to a pre- existing disease.
c) Para 21 (i) (c); Page 12 of the impugned award:
It is not in dispute that the Claimant had honestly disclosed the condition of his health and the medicines he was taking and in fact as advised by the 2 nd Respondent he got examined by a doctor of Mahaveer AS.55/2013 27 Jain Hospital who has signed the relevant portion of the proposal form.
d) Para 21 (ii) (c) : Page 12 of the impugned award: Taking advantage of want of those particulars in Ex.D3 and D3b RW-1 tried to disclaim Ex.D3a. RW-1 has disclosed that the mediclaim policy was issued only after being satisfied with the report of the doctor who had examined the Claimant in Mahaveer Jain Hospital.
Therefore, without any further discussion I proceed to hold that there was no impediment felt at all by R2 in issuing the mediclaim policy as per Ex.C1. Hence, my finding that subdural hematoma did not relate to any past disease of the Claimant. "
18) The Arbitral Tribunal has not considered the evidence of 1st Defendant that he was taking medicines like 'Aspirin' and 'Plavix' for the last 30 years before admitting to the Valley Hospital for Subdural Hematoma. Moreover, the Arbitral Tribunal has also not considered the medical records at Ex.C.2 to Ex.C.5 and D.1 recorded by the Doctors who treated the 1st Defendant, wherein, the Doctors specifically mentioned that the 'Plavix' and 'Aspirin' should be stopped. The Doctors knew the consequences of said drugs and decided to stop the same.
Moreso, the Arbitral Tribunal has not considered the evidence of R.W.3 that the medicines which the 1 st Defendant had taken are Anti Coagulant medicines, which AS.55/2013 28 are commonly called blood thinners. The medicines itself incurs risk of subdural hematoma. It cannot be said that subdural hematoma was caused by head injury or by any other reason, since it is not at all the case of the 1 st Defendant. The Arbitral Tribunal has not taken into consideration of the fact that the 1 st Defendant did not disclose the treatment which he had taken in 1987 at Mangalore and the medicines he was taking since 30 years in his claim statement and examination-in-chief filed before the Arbitral Tribunal. He has disclosed this fact when he was cross-examined by the Plaintiffs. It is also important to note that the said fact was not disclosed by him while submitting the proposal form to the Plaintiffs. Under such circumstances, the findings of the Arbitral Tribunal that subdural hematoma was not due to pre- existing disease does not hold good.
19) Regarding Quadruple bypass surgery:
The Plaintiffs have taken contention that the 1 st Defendant was taking treatment for Angina, a severe coronary heart disease, which is a pre-existing disease, AS.55/2013 29 which the 1st Defendant did not disclose while submitting proposal form. The 1st Defendant has contended that bypass surgery was done only to wean the 1 st Defendant from Ventilator and not because he had a heart condition.
Again, here it is important to mention Ex.C.5- Operative Record, recoded by the Doctor. It discloses that the 1st Defendant was suffering from severe coronary artery disease. After conducting operation for subdural hematoma, the 1st Defendant was intubated, he was in such condition for 10 days. During this period, myocardial infraction occurred due to non-supply of blood to the heart. Myocardial Infarction is nothing but heart attack.
Doctors were very well aware that this was happened due to stoppage of coagulated drugs. When Myocardial Infarction occurred, the patient cannot be intubated in such condition. He should be weaned from the ventilator.
Under such emergency condition, the doctors, who treated the 1st Defendant, decided to perform re-
vascularization. Re-vascularization is nothing but coronary artery bypass, the process of restoring the flow AS.55/2013 30 of blood to the heart. At the same time, the doctors were required to give anti coagulated drugs. However, they concerned with the need to give the 1st Defendant 'haparin' drugs (blood thinner) because the 1st Defendant had blood in his head. That risk was accepted by the Neuro Surgeon and the family of the 1 st Defendant. Then only, the doctors performed the operation. These medical history clearly indicates that the 1st Defendant had past medical history of coronary artery disease, for which, he was taking medicines like 'Aspirin', 'Plavix' and 'Isordil' for angina for the last 30 years, which led to subdural hematoma and the said drugs were stopped by the doctors to perform operation for subdural hematoma to avoid further bleeding. Once the drugs were stopped, it led to Myocardial Infarction i.e. heart failure due to non-
supply of blood. Under such circumstances, the 1 st Defendant could not be intubated for long time, hence, he was weaned off from the ventilator and performed heart surgery. When matter stood thus, the contention of the 1st Defendant that bypass surgery was done only to wean AS.55/2013 31 the Defendant from Ventilator and not because of heart condition is nothing but shaky and against the real fact recorded by the doctors in Exs.C.2 to Ex.C.5 and Ex.D.1, especially in Ex.C.3 and Ex.C.5. This fact has also been substantiated in the evidence of RW.2, Dr.Venkatesh, Cardiologist, who was examined before the Arbitral Tribunal, he has deposed in his examination-in-chief as follows, " Para-3 : I state that the hospital record of the claimant reveals that he is a known case of hypertension and is also a known case of Coronary Artery diseases with a history of having suffered a myocardial infarction about 30 years ago. The report also states that he was on medication i.e. Isordil and Plavix both of which are drugs used in the management of Coronary Artery disease.
Para 6 : I submit that based on the patient's previous history of myocardial infarction, his drug history of taking nitrates and plavix and based on the natural history of coronary artery disease, it can be concluded that the patient's heart condition has been pre existing and has NOT developed subsequent to the sudural hematoma."
In his cross examination, he has deposed as follows:
" When deciding whether a specific medicine was given for prevention or treatment would examine the records for the patient's history, physical examination details and any test reports and also the other medication prescribed before deciding whether a specific medicine was given is for preventive or for treatment purposes.
AS.55/2013 32 If a person who comes to me is on Aspirin and Statin as preventive medicines, in the absence of any heart disease I don't advise him to undergo bypass surgery. All such persons who have heart attacks need not undergo bye pass surgery.
But I am not an expert in that field. But I would say that Hypertension is not the cause for that condition. The witness adds that the most common causes for Subdural Hematoma are traumas and use of blood thinners."
20) The Arbitral Tribunal in its findings has specifically come to the conclusion that the drugs which were taken by the 1st Defendant were to manage the coronary artery disease and it is no doubt at all that the 1 st Defendant had severe coronary artery disease. However, it has denied to accept it on the ground that the disease which should be occurred within 12 months from the date of policy. Clause 10(c) of the terms and conditions of the policy which is marked as Ex.C.6 states that, any sickness for which the insured person has sought medical advise or has taken medical treatment in the preceding 12 months prior to the commencement of the travel. Hence, in this case, the 1st Defendant was taking medicine for his coronary artery disease for the last 30 years and it continued after obtaining the policy. Moreover, heart and AS.55/2013 33 coronary disease, diabetes, hypertension have been specifically excluded from the coverage of Ex.C.1- Insurance Policy. Under such circumstances, the findings of the Arbitral Tribunal that the 1st Defendant had no any disease within 12 months immediately prior to travel are not tenable.
21) The next question is, whether the Mediclaim Insurance Policy (Ex.C.1) specifically excluded the pre- existing disease as well as hypertension, diabetes and heart and coronary disease and circulatory disorders. The Plaintiffs have taken a contention that the contract of insurance policy is "uberrima fides". It is based on good faith and the insurance policy availed by the 1 st Defendant is subject to conditions as mentioned in the insurance policy and terms and conditions of insurance policy [Ex.C.1 and Ex.C.6]. The Plaintiffs have further contended that the Insurance Policy availed by the Claimant had expressly excluded the pre-existing disease as well as hypertension, diabetes and heart and circulatory disorders. This being the consensus ad AS.55/2013 34 idem/understanding between the parties, the Tribunal while holding that the Plaintiff is liable to pay the insurance amount has virtually re-written the contract between the parties. The learned counsel for the Plaintiffs is pleased to bring it to the notice of the Court regarding the findings in the impugned award. The learned Arbitrator at para-21 Clause-ii (b) of the award has held that, Respondent No.2 (Plaintiff) did not hesitate to accept the report and issue the policy, therefore, the claim that subdural hematoma was not due to a pre-existing disease. The learned Arbitrator has also held at para-21 Clause-ii(b) of the award that the Respondent (Plaintiff) was satisfied with the report of the Doctor who had examined the Claimant (1st Defendant) in Mahaveer Jain Hospital. In the backdrop of the findings of the learned Arbitrator, it is relevant to mention the terms of the policy.
" Exhibit-C1 : Insurance Policy :
Subject to specific exclusion of all medical expenses incurred directly due to Diabetes, hypertension, heart and circulatory disorders and standard exclusion heart and circulatory disorders, diabetes, hypertension as per Clause attached and any consequences attributable to accelerated by or arising there from as per the medical AS.55/2013 35 history stated in the proposal form and/or medical reports attached thereto.
Notwithstanding anything stated in the policy, it is hereby declared and agreed that all claims occasioned by, happening through or in consequence of any disease which is existing on the date of commencement of risk, whether specifically declared or not, in the proposal form completed by the Insured."
" Exhibit-C.6: Terms and conditions of the overseas mediclaim policy:
Clause No.10 of the Policy :
(b) Pre-existing Exclusions : This policy is not designed to provide an indemnity in respect of medical services the need for which arises out of a pre-existing condition as defined below in General condition 10(c).
(c) Pre-existing condition : Any sickness for which the Insured Person has sought advice or has taken medical treatment in the preceding 12 months prior to the commencement of travel."
22) It is also relevant to mention the relevant portion of the Proposal Form for Overseas Medical claim.
" Exhibit-D3(a) :
Medical History :
A. To be completed by the proposer :
PLEASE ANSWER THE FOLLOWING QUESTIONS WITH 'YES' OR 'NO' (ADASH IS NOT SUFFICIENT AND GIVE FULL DETAILS)
1. Are you in good health end free from physical and mental diseases or infirmity - YES
2. Have you ever suffered from any illness or disease up to the date of making the proposal
- NO AS.55/2013 36
3. Do you have any physical defect or deformity - NO
4. Have you ever been admitted to any hospital/nursing home/clinic for treatment or observation - NO
5. Have you suffered from any illness/disease or had an accident in the 12 months preceding the first day of insurance - NO
6. If the answer is yes to any of the foregoing questions please give full details as under . .." B. TO BE COMPLETED BY THE DOCTOR (TO BE COMPLETED BY MD ONLY)
1. a. History b. Any past history of disease, operations, accidents, investigation, etc.- NIL c. General Examination : Normal d. Systemic Examination : Normal
2. Electrocardiography :
a. Does the attached Electrocardiogram in your profession opinion show any abnormalities if so please describe -NIL b. Does the abnormality represent a current illness or disease which may possibly require medical treatment during proposer's forthcoming trip? Non-pathological c. Does the proposer now or did he/she in the past require medication for this abnormality- NO d. Please describe any treatment taken by proposer in the past or being taken at present
- NO e. Do you recommend Stress Test? If so please obtain the report on such test - NO.
3. Does the Blood/Urine Strip Test show any sugar? NIL PRB5 166
4. Do you consider that proposer is fit to travel anywhere abroad, due account being taken of the stress of air travel adversely affecting his health/medical condition?"
AS.55/2013 37
23) On perusal of Ex.C.1-Insurance Policy and Ex.C.6-
Terms and conditions of policy make it clear that, diabetes, hypertension, heart and circulatory disorders have been excluded from purview of the policy. Moreover, non obstinate clause in Ex.C.1 specifically states that all claims occasioned by, happening through or in consequence of any disease which is existing on the date of commencement of risk, whether specifically declared or not in the proposal form completed by the Insured.
24) Having gone through Ex.D.3(a)-Proposal Form, it is clear that the 1st Defendant did not disclose his pre- existing disease viz., coronary artery disease and the medicine, which he was taking for the said disease. Even he did not disclose the same to the Doctor who examined him at the time of filing the proposal form. The records maintained by the Doctors who treated the 1st Defendant in the hospital at New Jersey i.e. Ex.C.2, Ex.C.3, Ex.C.5 and Ex.D.1 and the evidence of 1 st Defendant before the learned Arbitrator clearly establish that the 1 st Defendant AS.55/2013 38 was suffering from Coronary Artery Disease and he was on treatment for the same for the last 30 years. This fact was withheld by the 1st Defendant and the same was not disclosed in Ex.D.3(a) and also not disclosed to the Doctor who examined him at the time of availing Insurance Policy. Even the learned Arbitrator has come to the conclusion that the 1st Defendant was suffering from severe Coronary Artery Disease. Under such circumstances, the findings of the Arbitral Tribunal that the Respondent No.2 (Plaintiff) did not hesitate to accept the report of the Doctor and issue the policy and that the Claimant (1 st Defendant) had honestly disclosed the condition of his health and the medicines he was taking are against the evidence placed on record and the same does not hold good.
25) The learned counsel for the Plaintiffs submits that the contract of insurance is based on uberrima fides and must be strictly construed while interpreting the words of the contract. The Plaintiff has relied upon the decision reported in (2009)5 SCC 599 in the case of Vikram Greentech India Limited and Another Vs. New India AS.55/2013 39 Assurance Company Limited. Para-16, 17, 18 and 19 of the said judgment reads as follows :
" 16. An insurance contract, is a species of commercial transactions and must be construed like any other contract to its own terms and by itself. In a contract of insurance, there is requirement of uberrima fides i.e. good faith on the part of the insured. Except that, in other respects, there is no difference between a contract of insurance and any other contract.
17. The four essentials of a contract of insurance are: (i) the definition of the risk, (ii) the duration of the risk, (iii) the premium, and (iv) the amount of insurance. Since upon issuance of the insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of the risks covered by the insurance policy, its terms have to be strictly construed to determine the extent of liability of the insurer.
18. The endeavour of the court must always be to interpret the words in which the contract is expressed by the parties. The court while construing the terms of policy is not expected to venture into extra liberalism that may result in rewriting the contract or substituting the terms which were not intended by the parties. The insured cannot claim anything more than what is covered by the insurance policy. (General Assurance Society Ltd. V. Chandmull Jain, Oriental Insurance Co. Ltd. V.Sony Cheriyan and United India Insurance Co. Ltd. V. Harchand Rai Chandan lal)
19. A document like proposal form is a commercial document and being an integral part of policy, reference to the proposal form may not only be appropriate but rather essential. However, the surveryors' report cannot be taken aid of nor can it furnish the basis for construction of a policy. Such outside aid for construction of insurance policy is impermissible."
AS.55/2013 40
26) The importance of the proposal form and the disclosure of material facts have also been laid down by the Hon'ble High Court of Kerala in the case of P.Sarojam V. L.I.C of India reported in AIR 1986 Kerala 201, Para-7 and 8 reads as follows:
" 7. The Supreme Court had occupation to consider the effect of false answers to questions in the proposal form relating to a policy of insurance in the decision in Mithoolal Nayak V. Life Insurance Corporation of India, AIR 1962 SC 814 the Supreme Court stated at page 820:
" The principle underlying the Explanation to S.19 of Contract Act is that a false representation, whether fraudulent or innocent, is irrelevant if it has not induced the party to whom it is made to act upon it by entering into a contract. We do not think that principle applies in the present case. The terms of the policy make it clear that the averments made as to the state of health of the insured in the proposal form and the personal statement were the basis of the contract between the parties, and the circumstance that Mahajan Deolal had taken pains to falsify or conceal that he had been treated for a serious ailment by Dr.Lakshmanan only a few months before the policy was taken shows that the falsification or concealment had an important bearing in obtaining the other party's consent. A man who has so, acted cannot afterwards turn round and say : "it could have made no difference if you had known the truth". In our opinion, - no question of waiver arises in the circumstances of this case, nor can the appellant take advantage of the Explanation to S.19 of the Indian Contract Act. "
A Division Bench of this Court in Aboobacker V. L.I.C. of India, 1983 Ker LT 492 stated at page 494 :
" Contracts of insurance fall within the category of "uberrima fides" contracts (a term which is AS.55/2013 41 convenient though not strictly accurate : Seaton V. Heath, (1899) 1 QB 782, 792). In such contracts as one party is in a very strong position to know the material facts and the other party is in a very weak position to discover them, the former is under a duty not only to abstain from making false representations of material facts but also to disclose, in the utmost good faith, such material facts as are within his knowledge to the other party."
The Division Bench has referred to the decision of Lord Mansfield in Carter V. Boehm, (1766) 3 Burr 1905 and other decided cases and certain passges from the textbook by McGillivray and Parkington on Insurance Law.
8. We have already adverted to the evidence in the case which would clearly show that Neeiakanta Pillai was suffering from a serious heart ailment at the time when Exts. B7 and B8 proposals were made for insurance on his life. Since the contract of insurance is uberrima fides the proposer owed a duty to disclose all material facts relating to his state of health. The insured gave false answers to the questions in the proposal form inducing the insurer to accept the proposal.
The mere fact that the Medical Officers of the L.I.C. of India had certified the life assured as good is not of much consequence, in the light of the facts disclosed by evidence that the certificates do not disclose the true state of affairs known to the insured who had submitted Exts.B7 and B8 proposals. The false answers to the questions in the proposal form given by the insured vitiate the contract of insurance and the defendant Corporal ion is entitled to repudiate the policies and decline payment thereunder.
We see no reason to interfere with the decision of the Court below. The appeal fails and is dismissed, in the circumstances without any order as to costs."
AS.55/2013 42
27) It is clearly held that the contract of insurance is "uberrima fides", the proposer owed a duty to disclose all material facts relating to his state of health. Here in this case, the 1st Defendant did not disclose his heart disease i.e. Coronary Artery Disease and the medication which he was taking for the last 30 years while submitting the proposal form to the Plaintiff and he did not also disclose the same to the Doctor who examined him. This conduct of the 1st Defendant would amount to breach of "uberrima fides". Even the learned Arbitrator has also come to the conclusion that the 1st Defendant had severe coronary artery disease. The learned arbitrator did not take into consideration of the terms of policy, which excludes pre- existing disease. The Arbitral Tribunal misinterpreted it as the Plaintiff had accepted the policy. The Arbitral Tribunal has interpreted the terms of contract-extra liberalism, which has led to rewriting the contract, it leads to substitution of terms of contract, which were not intended by the parties. The learned counsel for the 1 st Defendant has relied upon the judgment in New India Assurance Co.
AS.55/2013 43 Ltd. Vs. Shiv Kumar Rupramka, delivered by the Hon'ble State Commission, Delhi, decided on 22.03.2007, wherein his lordship has specifically held that :
" We will not dwell much on the concept of repudiation of claim by the appellant on the false declaration of the insured about the existence of pre existing disease as we have already dealt with the concept of pre-existing disease."
In the said judgment some of the conclusions are laid down. One of the conclusions is that :
" (i) The Disease means a serious derangement of health or chronic deep-seated disease frequently one that is ultimately fatal for which an insured must have been hospitalized or operated upon in the near proximity of obtaining the mediclaim policy."
28) Here in this case, the 1 st Defendant had severe coronary artery disease, for which, he was taking medication for the last 30 years. Once the drugs were stopped, he could not withstand the disease and bypass surgery was necessitated. Under such circumstances, the disease of the 1st Defendant squarely comes under the first conclusion as laid down by his lordship in the aforesaid decision.
AS.55/2013 44 Having regard to the facts and circumstances of the case, the ratio laid down in the cases of Vikram Greentech India Limited and P.Sarojam are aptly applicable to the facts and circumstances of the present case.
29) The Plaintiffs have raised maintainability of the claim of the 1st Defendant before the learned Arbitrator. The Plaintiffs have contended that the 1 st Defendant has not made Valley Hospital as party to the claim petition before the learned Arbitrator. It is contended that the Valley Hospital is a beneficiary to the claim and without being made as a party to the claim petition, the claim petition is not maintainable. It is further contended that, the 1st Defendant in the claim statement has sought for payment from the Respondents (Plaintiffs) in respect of third person who is stranger to the contract of Insurance and under such circumstances, the claim petition is liable to be dismissed. It is also the contention of the Plaintiffs that the liability of the Plaintiffs to indemnify the insured AS.55/2013 45 would arise based on the principle of Indemnity. In this case, the 1st Defendant without paying any amount towards medical expenses, laid a claim before the learned Arbitrator and under such circumstances, it cannot be said that the 1st Defendant has sustained loss, by virtue of which the Plaintiffs would be liable to indemnify the claim.
30) The 1st Defendant has stated that the Insurance Policy was a cashless facility and that the Plaintiff [RW.1] before the learned Arbitrator in her cross-examination has admitted this fact. The said admission goes to show that the policy was a cashless facility and if the agent is satisfied, it will pay directly to the hospital authority. It has also been stated that the Plaintiff's contention is not justified in view of the demands made by the hospital. At this stage, it is relevant to mention the finding of the learned Arbitrator. The learned Arbitrator in para16(b) of Page 16 of the award is pleased to hold as follows, " b. ........ I do not think that in a situation like this the Hospital is a necessary party and the Respondents can avoid payments of the bills, mainly because the Claimant has not paid the charges to that Hospital thereby defeating the AS.55/2013 46 very object of obtaining a mediclaim policy. Hence, I find no substance in these contentions of the Respondents. Therefore, I hold issue No.4 in the negative."
31) Admittedly, the policy filed by the 1 st Defendant is an Overseas Mediclaim Policy. The Hospital can directly submit its request to settle the medical claims of the patient or it can demand the patient to settle the payment of bills. Here in this case, the hospital authority had submitted its request to the Plaintiffs' agent Coris, USA to pay the bills of the 1 st Defendant and the same was rejected by the Coris, USA on the ground of pre- existing disease. Then, the hospital authority demanded the 1st Defendant to pay medical bills. It is an admitted fact that the 1st Defendant without making payment to the hospital towards the medical expenses filed the claim statement before the learned Arbitrator to indemnify him. Moreover, he has sought direction to pay medical bills to the hospital without making the hospital as party in the claim petition. If the 1st Defendant had paid the hospital bills, he could have claimed the said amount on the AS.55/2013 47 ground of contract of indemnity. However, the 1 st Defendant without paying any amount towards medical bills claimed it. Of course, it may be a cashless policy. However, the 1st Defendant, in the absence of hospital as a party in the proceedings, has sought direction to pay the bills. In other words, the 1 st Defendant wanted the learned Arbitrator to pass an order for payment of the bills to the stranger, who is not a party to the proceedings, which is impermissible under law. When matter stood thus, the finding of the learned Arbitrator doesn't hold good under law.
32) The learned counsel for the Plaintiff has relied upon the judgment reported in (2015) 3 SCC 49 in the case of Associate Builders V. Delhi Development Authority, wherein, the Hon'ble Supreme Court was pleased to explain that when the court to interfere with the arbitral award under various heads of public policy. It is relevant to mention para-27, 28, 29, 30 and 31 of the said Judgment which reads as follows :
AS.55/2013 48 " 27. Coming to each of the heads contained in Saw Pipes [(2003) 5 Scc 705: AIR 2003 SC 2629] judgment, we will first deal with the head "fundamental policy of Indian law". It has already been seen from Renusagar [Renusagar Power Co. Ltd. V. General Electric Co., 1994 Supp (1) SCC 644] judgment that violation of the Foreign Exchange Act and disregarding orders of superior courts in India would be regarded as being contrary to the fundamental policy of Indian law. To this it could be added that the binding effect of the judgment of a superior court being disregarded would be equally violative of the fundamental policy of Indian law.
28. In a recent judgment, ONGC Ltd. V. Western Geco International Ltd. this Court added three other distinct and fundamental juristic principles which must be understood as a part and parcel of the fundamental policy of Indian law. The Court held : (SCC pp.278-80, paras 35 & 38-40) " 35. What then would constitute the 'fundamental policy of Indian law' is the question. The decision in ONGC does not elaborate that aspect. Even so, the expression must, in our opinion, include all such fundamental principles as providing a basis for administration of justice and enforcement of law in this country. Without meaning to exhaustively enumerate the purport of the expression 'fundamental policy of Indian law', we may refer to three distinct and fundamental juristic principles that must necessarily be understood as a part and parcel of the fundamental policy of Indian law. The first and foremost is the principle that in every determination whether by a court or other authority that affects the rights of a citizen or leads to any civil consequences, the court or authority concerned is bound to adopt what is in legal parlance called a 'judicial approach' in the matter. The duty to adopt a judicial approach arises from the very nature of the power exercised by the AS.55/2013 49 court or the authority does not have to be separately or additionally enjoined upon the for a concerned. What must be remembered is that the importance of a judicial approach in judicial and quasi-
judicial determination lies in the fact that so long as the court, tribunal or the authority exercising pwoers that affect the rights or obligations of the parties before them shows fidelity to judicial approach, they cannot act in an arbitrary, capricious or whimsical manner. Judicial approach ensures that the authority acts bona fide and deals with the subject in a fair, reasonable and objective manner and that its decision is not actuated by any extraneous consideration. Judicial approach in that sense acts as a check against flaws and faults that can render the decision of a court, tribunal or authority vulnerable to challenge.
38. Equally important and indeed fundamental to the policy of Indian law is the principle that a court and so also a quasi-judicial authority must, while determining the rights and obligations of parties before it, do so in accordance with the principles of natural justice. Besides the celebrated audi alteram partem rule one of the facets of the pirnciples of natural justice is that the court/authority deciding the matter must apply its mind to the attendant facts and circumstances while taking a view one way or the other. Non-application of mind is a defect that is fatal to any adjudication. Application of mind is best demonstrated by disclosure of the mind and disclosure of mind is best done by recording reasons in support of the decision which the court or authority is taking. The requirement that an adjudicatory authority must apply its mind is, in that view, so deeply embedded in our jurisprudence that it can be described as a fundamental policy of Indian law.
AS.55/2013 50
39. No less important is the principle now recognized as a salutary juristic fundamental in administrative law that a decision which is perverse or so irrational that no reasonable person would have arrived at the same will nto be sustained in a court of law. Perversity or irrationality of decisions is tested on the touchstone of Wednesbury principle of reasonableness. Decisions that fall short of the standards of reasonableness are open to challenge in a court of law often in writ jurisdiction of the superior courts but no less in statutory processes wherever the same are available.
40. It is neither necessary nor proper for us to attempt an exhaustive enumeration of what would constitute the fundamental policy of Indian law nor is it possible to place the expression in the straitjacket of a definition. What is important in the context of the case at hand is that if on facts proved before them the arbitrators fail to draw an inference which ought to have been drawn or if they have drawn an inference which is on the face of it, untenable resulting in miscarriage of justice, the adjudication even when made by an Arbitral Tribunal that enjoys considerable latitutde and play at the joints in making awards will be open to challenge and may be cast away or modified depending upon whether the offending part is or is not severable from the rest."
29. It is clear that the juristic principle of a "judicial approach" demands that a decision be fair, reasonable and objective. On the obsverse side, anything arbitrary and whmsical would obviously not be a determination which would either be fair, reasonable or objective.
AS.55/2013 51
30. The audi alteram partem principle which undoubtedly is a fundamental juristic principle in Indian law is also contained in Sections 18 and 34(2)(a)(iii) of the Arbitration and Concilation Act. These sections read as follows :
"18. Equal treatment of parties. - The parties shall be treated with equality and each party shall be given a full opportunity to present his case.
34. Application for setting aside arbitral award.- (1) * * * (2) An arbitral award may be set aside by the court only if -
(a) the party making the application furnishes proof that - * * * *
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case;"
31. The third juristic principle is that, a decision which is perverse or so irrational that no reasonable person would have arrived at the same is important and requires some degree of explanation. It is settled law that where :
(i) a finding is based on no evidence, or
(ii) an Arbitral Tribunal takes into account something irrelevant to the decision which it arrives at; or
(iii) ignores vital evidence in arriving at its decision, such decision would necessarily be perverse."
33) The 1st Defendant has relied upon the following decisions :-
1. (1999) 9 SCC 449 [M/s.Arosan Enterprises Ltd. Vs. Union of India] AS.55/2013 52 " 39. .... The court as a matter of fact, cannot substitute its evaluation and come to the conclusion that the arbitrator had acted contrary to the bargain between the parties. If the view of the arbitrator is a possible view the award or the reasoning contained therein cannot be examined."
2. 2003(5) SCC 705 [Oil & Natural Gas Corporation Ltd., V. Saw Pipes Ltd.] " 31. ..... It is required to be held that the award could be set aside if it is patently illegal. Result would be - award could be set aside if it is contrary to :-
(a) Fundamental policy of Indian law; or
(b) The interest of India; or
(c) Justice or morality, or
(d) in addition, if it is patently illegal."
3. (2006) 11 SCC 181 [McDermott International INC -V.- Burn Standard Co. Ltd.] " 52. The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, scheme of the provision aims at keeping the supervisory role of the court at minimum level."
4. 2008 (2) Arbitration Law Report 526 [Union of India V. Associated Construction Co.] " The observations of the Supreme Court in the case of Sudarsan Trading Co. as also of the High Court in Ingersoll Rand India Ltd. are noteworthy. In Sudarsan Trading Co. the Supreme Court observed that the court had no jurisdiction to AS.55/2013 53 substitute its own evaluation of the conclusion of law as arrived at by the arbitrator. The Supreme Court also observed that once there is no dispute as to the contract, what is the interpretation of that contract is a matter for the arbitrator and on which the court cannot substitute its own decision."
5. 2008 (3) Arbitration Law Reporter, 56 [National Highways Authority of India V. Afcons Infrastructure Ltd.] " 14. Considering the declaration of the law by the Supreme Court in ONGC Vs. Saw Pipes Ltd. (Supra), I find that the present case is not one where the arbitral tribunal has ignored the terms of the contract. What the arbitral tribunal has done is to arrive at a particular interpretation after considering the relevant terms of the contract and, just because the interpretation that has been arrived at by the tribunal is not palatable to the petitioner, is not ground enough for interfering with the award. Such interference can only be justified where the award is contrary to the substantive provisions of law or the provisions of the Act or if it is against the terms of the contract. The award must be so patently illegal that it goes to the root of the matter. If the illegality is of a trivial nature, the award cannot be said to be against public policy. The award must be so unfair and unreasonable that it shocks the conscience of the Court."
6. 2008(3) Arbitration Law Reporter 465 [CMDR. S.P.Puri V. Alankit Assignments Ltd.] " 9. Arbitrators are not required to give elaborate judgments dealing with each and every ground or reason. they have to consider the entire facts in proper perspective and give an indication of the grounds and reasons that prevailed upon them to decide the matter. Law requires arbitrators o give reasons and nothing more. If the reasons are clear and indicate the basis for the decision, the award should be upheld and cannot be set aside. Law does not require arbitrators to give detailed judgments dealing with each and every contention AS.55/2013 54 raised by the parties. What is required to be indicated is the basis on which the arbitrators have taken a particular view."
7. (2012) 1 SCC 594 [P.R.Shah, Shares and Stock Brokers Private Limited Vs. B.H.H. Securities Private Limited and Others] " 21. A court does not sit in appeal over the award for an Arbitral Tribunal by reassessing or re-appreciating the evidence. An award can be challenged only under the grounds mentioned in Section 34(2) of the Act. Therefore, in the absence of any ground under Section 34 (2) of the Act, it is not possible to re-examine the facts to find out whether a difference decision can be arrived at."
8. National Highway Authority of Vs.Gamman India Ltd., on 21st August, 2014 " Para 26) Relying on the aforesaid decisions Mr.Bose has submitted that the scope of interference by the Court under Section 34 of the 1996 Act is very limited."
9. AIR 2010, SC 972 [Ravindra Kumar Gupta and Company Vs. Union of India] " Here the Supreme Court is of the opinion that High Court committed an error is re-appreciating the evidence produced by the Arbitrator, where an Arbitrator before giving his final award would have recorded and also scrutinized the evidence both the parties would have produced. So the Court has no jurisdiction to interfere with the award passed by the Arbitrator. "
10. AIR 2010, SC 739 [State Bank of Rajastan Vs. NAVB Harat Construction Company] AS.55/2013 55 " Under this case also, the Supreme Court has observed that Section 30 of the Arbitration and Conciliation Act it has clearly stated that Court is not empowered to re-appreciate the evidence and examine the correctness and see whether the Arbitrator has passed the award in a proper way or not. The court cannot be set aside merely on erroneous of the Arbitrator in passing the award, but the award can only be set aside if they come under the provisions of the Section 34, if the Arbitrator has done the proceedings in a misconduct way."
11. 1994(6) SCC 585 [State Bank of Rajastan V. Puri Construction Company Limited and another] " The Supreme Court states that court will not sit in appeal over the award and review the reasons, the court will set aside the award only if it is apparent from the award that there is no evidence to support the conclusions or if the award is based upon any legal propositions which is erroneous." The learned Counsel for the 1st Defendant also relied upon the decision reported in AIR 2013 Culcutta 52, Union of India vs. Binod Kumar Agarwal, wherein, their lordships were pleased to cull out certain principles.
34. The ratio laid down in the decisions relied upon by the 1st Defendant are the established principles of law, which debars the Court from interfering with the arbitral award, if the award is not in contrary to the provisions laid down in Section 34 of the Arbitration and Conciliation Act, AS.55/2013 56 1996. Here, in this case, the Court comes to the conclusion that a findings of the Arbitral Tribunal is based on no evidence, it takes into account something irrelevant to the decision which it arrives at and ignores vital evidence in arriving at its decision and thereby the award is passed in violation of the public policy.
35) For the foregoing discussions, this court comes to the following conclusions:-
(1) That the learned Arbitrator has ignored vital evidence both documentary and oral evidence which establishes that the 1 st Defendant had heart problem and he was on medication for 30 years before admitting to the hospital. Ex.C.1-Insurance Policy and Ex.C.6- terms and conditions of mediclaim policy which specifically exclude pre-existing disease. It also excludes diseases like heart and circulatory disorders, diabetes and hypertension. Ex.C.2-Discharge summary Ex.C.3-Consultation report, Ex.C.5-Operative Record make it clear that the 1 st Defendant had coronary artery disease and he had been on medication like 'Plavix' and 'Aspirin', which fact has also been substantiated in the evidence of AS.55/2013 57 the 1st Defendant before the learned Arbitrator that he was on medication which was a combination of 'Plavix' and 'Aspirin' as well as medication for Angina.
R.W.2-Dr.S.Venkatesh, who was examined before the learned Arbitrator has also stated that having regard to the previous history of 1st Defendant's heart condition, the 1st Defendant was suffering from Coronary Artery Disease. Moreover, R.W.3-Mr.Suresh.H.S has also deposed before the learned Arbitrator that the 1st Defendant's medical records indicated that he was on medication such as 'Isordil', 'Plavix' and 'Aspirin' which are anticoagulated medicines commonly called blood thinner itself increases the risk of subdural Hemotama. More so, the learned Arbitrator in his award has specifically come to the conclusion that the 1st Defendant had severe coronary artery disease.
(2) The Arbitral Tribunal has over-
looked Ex.D.3(a)-Proposal form submitted by the 1st Defendant. The Arbitral Tribunal ought not to have come to the conclusion that the 1 st Defendant had honestly disclosed his medical conditions in the proposal form. The 1 st AS.55/2013 58 Defendant never disclosed in his proposal form that he was a known patient of coronary artery disease and that he was taking medication for 30 years. The findings of the Tribunal that it was not because of the coronary condition that the 1st Defendant under went 'quadruple bypass surgery'. This finding of the tribunal is against the conclusion arrived at by the Tribunal that the 1st Defendant had severe coronary artery disease and also against the medical records and oral evidence of P.W.1 as stated supra. Moreso, the findings of the Tribunal that the Plaintiff had accepted the proposal form is not supported by any evidence. The 1st Defendant has not disclosed his pre-existing disease in proposal form and the policy was granted subject to exception whether specifically declared or not in the proposal form and moreover, the contract is uberrima fide. Duty is cast upon the insured to disclose and make honest representation to the Insurer. Under such circumstances, the finding that the Plaintiffs had accepted the report in the proposal form is not supported by any evidence.
(3) The finding of the Arbitral Tribunal is contrary to the terms of policy which would AS.55/2013 59 amount to contrary to law. Ex.C.6-Terms and conditions of Policy - Nature of Coverage specifically states that in the event of "sudden unexpected sickness or accident arising when the insured person is outside the Republic of India" and Ex.C.6 specifically excludes pre- existing disease as well as hypertension, diabetes, heart and circulatory disorders. This is an understanding between the parties i.e. consensus ad idem. Under such circumstances, finding of the Arbitral Tribunal that the Plaintiff is liable to pay mediclaim has virtually rewritten the contract between the parties.
(4) The findings of the Tribunal to pay hospital bills, without making the hospital as a party in the claim petition is suffering from perversity. The Hon'ble Supreme Court of India has held in Para-31 of the decision reported in the case of Associated Builders Vs. Delhi Development Corporation that where,
(i) a finding is based on no evidence, or
(ii) an Arbitral Tribunal takes into account something irrelevant to the decision which it arrives at; or
(iii) ignores vital evidence in arriving at its decision, such decision would necessarily be perverse."
AS.55/2013 60 For all these reasons, I am of the opinion that the impugned award passed by the Hon'ble Arbitral Tribunal is in conflict with Public Policy of India. Accordingly, I answer Point No.1 in the affirmative.
36) Point No.2 : For the foregoing discussions and answer to Point No.1, I proceed to pass the following :
ORDER (1) The suit filed by the Plaintiff under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the award dated 06.05.2013 is hereby allowed and the impugned award dated 06.05.2013 passed by the Hon'ble Arbitral Tribunal/Defendant No.2 is hereby set aside.
(2) No order as to costs.
[ Dictated to the Judgment Writer, transcribed and computerized by her, transcript thereof corrected and then pronounced by me in open court this the 7th day of November, 2018.] [RAMA NAIK] VI Addl.City Civil & Sessions Judge Bengaluru City AS.55/2013 61