National Consumer Disputes Redressal
Shashikant Awadooth Rotkar vs National Insurance Company Limited & 2 ... on 17 July, 2017
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 1184 OF 2017 (Against the Order dated 21/03/2017 in Appeal No. 1218/2014 of the State Commission Maharastra) 1. SHASHIKANT AWADOOTH ROTKAR R/O. GURURAJ, OLD STATE BANK COLONY, PRATAPNAGAR WARDHA, DISTRICT-WARDHA MAHARASHTRA ...........Petitioner(s) Versus 1. NATIONAL INSURANCE COMPANY LIMITED & 2 ORS. BRANCH WARDHA, THROUGH BRANCH MANAGER, MOHATA MARKET MAIN ROAD, TQ. AND DISTRICT-WARDHA MAHARASHTRA 2. NATIONAL INSURANCE COMPANY LIMITED THROUGH DEPT. MANAGER, OFFICE GOPAL PLAZA, DEVARANKAR NAGAR, BADNERA ROAD, AMRAVATI TQ & DISTRICT-AMRAVATI MAHARASHTRA 3. ANURAG RATHI R/O. IN FRONT OF BHAGWATI MEDICAL NEAR BHAMTIPURA WARDHA, TQ AND DISTRICT-WARDHA MAHARASHTRA ...........Respondent(s)
BEFORE: HON'BLE MRS. REKHA GUPTA,PRESIDING MEMBER
For the Petitioner : Mr Anant Salway, Advocate For the Respondent :
Dated : 17 Jul 2017 ORDER
The present revision petition has been filed against the judgment dated 21.03.2017 of the Maharashtra State Consumer Disputes Redressal Commission, Circuit Bench at Nagpur ('the State Commission') in First Appeal no. 218 of 2014.
2. The facts of the case as per the petitioner/ complainant are that the petitioner took a Medi-claim Insurance Policy (short MIP) from the respondent/ OP nos. 1 and 2 through respondent no. 3 - Mr Anurag Rathi. The petitioner filed the proposal form which was filled by respondent no. 3. During the operation of the MIP, in January 2011, the petitioner suffered chest pain. He was admitted to the hospital and was referred to Avanti Hospital at Nagpur. The petitioner remained admitted at Avanti Hospital Nagpur from 12.01.2011 to 17.01.2011 and underwent Angiography and Angioplasty on 13.01.2011 for which the petitioner paid an amount of Rs.1,77,430/-.
3. The petitioner and his brother submitted the claim of expenditure for compensation in the MIP with respondent no. 1 on 14.01.2011 and 01.12.2011. However, the respondent nos. 1 and 2 in spite of submitting the entire documents repudiated the medi-claim of the petitioner on 10.02.2012, on the ground of not submitting all the documents. The petitioner, therefore, gave notice on 09.03.2012 to OP nos. 1 and 2.
4. The petitioner thereafter filed a complaint with the information as above and then further submitted that the treatment taken by the petitioner in the year 2009 had no nexus with the heart attack suffered by him in the claim. The same was also informed to him by the doctor of Avanti Hospital Dr Mahurkar who treated the petitioner at Nagpur. The petitioner complained that the respondent without conducting a detailed enquiry repudiated the claim. Thereby caused deficiency in service and hence, the petitioner filed a complaint with a prayer to provide him the medi-claim of Rs.1,00,000/- with interest at the rate of 12% per annum and to provide him Rs.50,000/- as compensation for physical and mental harassment and cost of Rs.1000/- for litigation.
5. On notice, the respondent nos. 1 and 2 appeared and countered the complaint denying the allegations made. The respondent nos. 1 and 2 submitted that the petitioner did not disclose his ailment in the proposal form and the operation conducted upon him prior to taking the policy. He had suffered a Cervical Lamina Catania and was operated r in December 2009. He suppressed the information while filling up the proposal form. He also did not submit the original documents and bills of treatment taken by him regarding Heart ailment. Therefore, the claim filed in the MIP by the petitioner was repudiated. The OP nos. 1 and 2 claimed that there was no deficiency in service and submitted that the claim was repudiated as per the conditions of the policy. Hence, requested to dismiss the complaint.
6. The respondent no. 3 filed his written version and denied the contentions of the petitioner and stated that he was only an agent. The sanction of the claim or repudiation was to be done by respondent nos. 1 and 2. The proposal form was filled by the petitioner and it was his responsibility to give detailed information of his previous ailments and the operations conducted upon him. He did not inform about the operation which was conducted upon him in December 2009. Hence, he suppressed the information and therefore, the claim in MIP was repudiated. Thus, respondent no. 3 requested to dismiss the complaint.
7. The District Consumer Disputes Redressal Forum, Wardha ('the District Forum') vide its order dated 18.02.2013, while allowing the complaint gave the following order:
< > The applicant nos. 1 and 2 are severally and jointly liable to pay the insurance amount of Rs.1.00 lakh and the interest @ 10 PCPA, since date of declined the claim, i.e., since 10.01.2012;
The non-applicant nos. 1 and 2 should pay Rs.5,000/- towards mental and physical agonies to the applicant and Rs.1,500/- towards complainant's expenses;
The non-applicant nos. 1 and 2 should comply the order within 30 days from the date of order failing which the non-applicant shall be liable to pay interest @ 12% than 10%; and No order against non-applicant no. 3."
8. Aggrieved by the order of the District Forum, the respondent/ opposite parties filed an appeal before the State Commission. The State Commission while allowing the appeal under its order dated 21.03.2017 observed as under:
"We considered the contentions of both the parties. It is the case of the respondent that he had undergone an operation in the year 2009 but there is no relation of that operation to the heart attack suffered by him. But it shows that he had undergone an operation and he was aware that he had taken the medical treatment. Hence, at the time of filing the proposal form it was certainly incumbent upon the respondent to give the information of the treatment undergone by him. The principle of contract of insurance as opined by the Hon'ble Supreme Court shows that the policy holder for taking the policy should disclose all information regarding his previous medical treatment. It is certainly not for him to plead whether it has a relation with the developed claim condition or not. Also the respondent would not know while taking the medi-claim policy, as to what he would suffer or may not suffer in the future. Hence, in all fairness and as per the requirement of the principle of the truth full submission, it is incumbent upon him to give the information of previous ailment. As the respondent suppressed the information he certainly deserved to be responsible for the breach of the condition. When the situation is so, the appellant cannot be blamed to have committed deficiency in service by repudiating the claim. It is also necessary for the respondent to submit the papers of his treatment as are required by the appellant.
We find that in view of the law laid down by the Hon'ble Supreme Court regarding giving of health information at the time of filing the proposal which was fully known to the respondent. The various judgments cited by the respondent regarding proving of ailment or nexus of existing ailment with the claim ailment does not hold ground to help the respondent. We also find that the learned Forum failed to appreciate the fact that the respondent had undergone an operation on his body and hence, was well aware of the information regarding the operation. As per the submissions of respondent no. 2 the agent, the respondent himself had filled the information in the policy form. Hence, it was incumbent upon him to provide the correct information and not suppress anything. As the information was suppressed, there was no reason to allow the complaint as it was the breach of condition. Hence, the learned Forum committed a mistake and passed the order which does not stand the test of justifiableness. Hence, it deserved to be set aside".
9. Hence, the present revision petition.
10. I have heard the learned counsel for the petitioner Mr Anant Salway. Learned counsel for the petitioner did not contest the fact that the petitioner had primarily suffered from Cervical Lamina Catania and taken treatment for the same. He contended that there was no nexus of the present illness with the previous ailment and that the petitioner had suffered a heart attack in 2011. He further stated that the proposal form was filed by respondent no. 3, i.e., the agent.
11. The Hon'ble Supreme Court in the case of Satwant Kaur Sandhu vs New India Assurance Co. Ltd. - IV (2009) CPJ 8 (SC) wherein it has held that:
12. There is no dispute that Section 45 of the Insurance Act, 1938 (for short "the Act"), which places restrictions on the right of the insurer to call in question a life insurance policy on the ground of mis-statement after a particular period, has no application on facts at hand, inasmuch as the said provision applies only in a case of life insurance policy. The present case relates to a mediclaim policy, which is entirely different from a life insurance policy. A mediclaim policy is a non-life insurance policy meant to assure the policy holder in respect of certain expenses pertaining to injury, accidents or hospitalizations. Nonetheless, it is a contract of insurance 8 falling in the category of contract uberrimae fidei, meaning a contract of utmost good faith on the part of the assured. Thus, it needs little emphasis that when an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge. It is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not. Of course, obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known. The obligation to disclose necessarily depends upon the knowledge one possesses. His opinion of the materiality of that knowledge is of no moment. (See: Joel Vs. Law Union & Crown Ins. Co.1)
13. In United India Insurance Co. Ltd. Vs. M.K.J. Corporation2, this Court has observed that it is a fundamental principle of insurance law that utmost faith must be observed by the contracting parties. Good faith forbids either party from non- disclosure of the facts which the party privately knows, to draw the other into a bargain, from his ignorance of that fact and his 1 [1908] 2 K.B. 863 2 (1996) 6 SCC 428 9 believing the contrary. (Also see: Modern Insulators Ltd. Vs. Oriental Insurance Co. Ltd.3).
14. MacGillivray on Insurance Law (Tenth Edition) has summarised the assured's duty to disclose as under:
"...the assured must disclose to the insurer all facts material to an insurer's appraisal of the risk which are known or deemed to be known by the assured but neither known nor deemed to be known by the insurer. Breach of this duty by the assured entitles the insurer to avoid the contract of insurance so long as he can show that the non-disclosure induced the making of the contract on the relevant terms."
15. Over three centuries ago, in Carter Vs. Boehm4, Lord Mansfield had succinctly summarised the principles necessitating a duty of disclosure by the assured, in the following words:-
"Insurance is a contract of speculation. The special facts upon which the contingent chance is to be computed lie most commonly in the knowledge of the assured only; the underwriter trusts to his representation, and proceeds upon confidence that he does not keep back any circumstance in his knowledge to mislead the underwriter into a belief that the circumstance does not exist. The keeping back such circumstance is a fraud, and therefore the policy is void. Although the suppression should happen through mistake, without any fraudulent intention, yet still the underwriter is deceived and the policy is void; because the risqui run is really different from the risqui understood and intended to be run at the time of the agreement...The policy 3 (2000) 2 SCC 734 4 (1766) 3 Burr. 1905 1 0 would be equally void against the underwriter if he concealed...Good faith forbids either party, by concealing what he privately knows, to draw the other into a bargain from his ignorance of the fact, and his believing the contrary."
17. The term "material fact" is not defined in the Act and, therefore, it has been understood and explained by the Courts in general terms to mean as any fact which would influence the judgment of a prudent insurer in fixing the premium or determining whether he would like to accept the risk. Any fact which goes to the root of the Contract of Insurance and has a bearing on the risk involved would be "material".
18. As stated in Pollock and Mulla's Indian Contract and Specific Relief Acts any fact the knowledge or ignorance of which would materially influence an insurer in making the contract or in estimating the degree and character of risks in fixing the rate of premium is a material fact.' 1 1
19. In this regard, it would be apposite to make a reference to Regulation 2(1)(d) of the Insurance Regulatory and Development Authority (Protection of Policyholders' Interests) Regulations, 2002, which explains the meaning of term "material". The Regulation reads thus:
"2. Definitions.--In these regulations, unless the context otherwise requires,--
(a) xxx xxx xxx (b) xxx xxx xxx (c) xxx xxx xxx
(d) "Proposal Form" means a form to be filled in by the proposer for insurance, for furnishing all material information required by the insurer in respect of a risk, in order to enable the insurer to decide whether to accept or decline, to undertake the risk, and in the event of acceptance of the risk, to determine the rates, terms and conditions of a cover to be granted.
Explanation: "Material" for the purpose of these regulations shall mean and include all important, essential and relevant information in the context of underwriting the risk to be covered by the insurer." Thus, the Regulation also defines the word "material" to mean and include all "important", "essential" and "relevant" information in the context of guiding the insurer to decide whether to undertake the risk or not.
20. The upshot of the entire discussion is that in a Contract of Insurance, any fact which would influence the mind of a 1 2 prudent insurer in deciding whether to accept or not to accept the risk is a "material fact". If the proposer has knowledge of such fact, he is obliged to disclose it particularly while answering questions in the proposal form. Needless to emphasise that any inaccurate answer will entitle the insurer to repudiate his liability because there is clear presumption that any information sought for in the proposal form is material for the purpose of entering into a Contract of Insurance".
12. The National Commission in the case of Life Insurance Corporation of India and Anr vs Maya Devi - II (2016) CPJ 396 (NC) has held as under:
"Having given our anxious consideration to the material on record, we are of the opinion that the answers given by the insured in the proposal form were untrue to his knowledge. There was clear suppression of 'material facts' in regard to the health of the insured. As aforestated, it was not for him to decide whether the information sought for in the aforesaid questionnaire was material for the purpose of the policy in question. At any rate, the statements made in the proposal form were untrue and incorrect. We are, therefore, of the opinion that the corporation was justified in repudiating the claim made by the complainant".
13. The National Commission in the case of Life Insurance Corporation of India vs Veena and Ors. - II (2014) CPJ 95 (NC) has held as under:
"8. Complainant has not pleaded in the complaint that insured committed suicide and in such circumstances, it cannot be inferred that insured died on account of suicide. In the complaint, only this fact has been mentioned that he died untimely. Apparently, it appears that on account of heart disease, insured collapsed. Even if it is presumed that the cause of death had no nexus with the disease suffered by the insured, complainants were not entitled for any claim as held by this Commission in II (2007) CPJ 51 (NC), Life Insurance Corporation of India vs Krishan Chander Sharma, as there was clear suppression of material facts regarding insured's health.
9. Complainant mentioned in the complaint that insured was an agriculturist and hale and healthy whereas record reveals that he was suffering from heart disease. Thus, it becomes clear that complainants have not come with clean hands and on this count also complaint was liable to be dismissed and learned District Forum committed error in allowing complaint and learned State Commission further committed error in dismissing appeal and revision petition is to be allowed".
Citations above are squarely applicable to the case on hand.
14. Admittedly, in this case, the petitioner was well aware that he had suffered from Cervical Lamina Catania in the year 2009 and taken treatment for the same but suppressed this information from the respondents. The State Commission has correctly concluded that at the time of filling up the proposal form it was his responsibility to give detailed information of all his ailments and operations conducted upon him. As the petitioner suppressed the information he was guilty of breach of condition and hence, his claim was rightly repudiated.
15. In view of the discussion above, I find no jurisdictional error or material irregularity in the impugned order which may call for interference in exercise of powers under section 21 (b) of the Consumer Protection Act, 1986. Revision petition is, therefore, dismissed with no order as to costs.
...................... REKHA GUPTA PRESIDING MEMBER