State Consumer Disputes Redressal Commission
R. Swamynatha S/O. V. Rangaswamy Chetty vs Star Health And Allied Insurance Co. ... on 7 October, 2023
1 CC/54/2014
Date of Filing : 05.04.2014
Date of Disposal : 07.10.2023
BEFORE THE KARNATAKA STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, BENGALURU (PRINCIPAL BENCH)
DATED THIS THE 07th DAY OF OCOTOBER 2023
PRESENT
Mr. K.B.SANGANNANAVAR : JUDICIAL MEMBER
Mrs M.DIVYASHREE : LADY MEMBER
CC-NO.54/2014
R.Swamynatha
S/o V.Rangaswamy Chetty.
Aged about 79 years,
R/at # 597, Down Bazar Road,
Yelahanka Old Town,
Bengaluru-64.
Since dead his LR:
Sunder Swamynathan
S/o late R.Swamynatha
Aged about 47 years
R/at C/o V.Sambasivam,
No.1421-A, 18th main, 5th block,
1st stage, HBR layout,
Bengaluru-43.. . ..Complainant/s
(By Adv.Sri.G.S.Prasannakumar)
VS
1.
1. Star Health and Allied Insurance Co. Ltd.
Branch Office at # 3, III Floor,
JVT Towers, VIII-A Main,
Sampangirama Nagar,
Bengaluru-27.
2. Star Health & Allied Insurance Co. Ltd.
Regd. Office at # 1, New Tank Street,
Valluvar Kottam High Road,
2 CC/54/2014
Nungambakkam,
Chennai-600034. ... Opposite party/s
(By Adv.S.Krishna Kishore)
ORDER
BY Mr.K.B.SANGANNANAVAR : Pri.Dist & Session Judge (R) - JUDICIAL MEMBER.
1. This is a complaint filed U/s.17 of CPA 1986 with a prayer to direct OPs.1 & 2 to pay an amount of USD 39,772.75 (equivalent to INR 23,86,365/- and to pay Rs.10 lakhs as damages along with interest at 18% p.a. from the date of complaint till payment.
2. The brief facts of the case of the Complainant are stated as follows:
This complaint is filed on 05.04.2014 through advocate. The complainant died pending enquiry and his LR is brought on record U/o 22 Rule 3 R/w Sec.151 of CPC. As there was a delay to bring LR was condoned for the reasons sworn in by the said LR as he is settled in USA. He is one Mr. Sunder Swamynathan S/o late R.Swamynatha. He is brought on record as LR of the complainant and he is represented by GPA Mr.V.Sambashivam, aged about 47 years, R/at C/o V.Sambasivam, No.1421-A, 18th main, 5th block, 1st stage, HBR layout, Bengaluru-43.
3. It was the case of the Complainant, that during his life time planned for foreign trip to USA scheduled on 04.06.2012 along with his relatives obtained the policy under the name and style 3 CC/54/2014 Star Travel Protect Insurance from OP.1 and had paid premium amount of Rs.32,914/- to OP.2. This Policy covers for 120 days and covers emergency medical expenses, transportation expenses etc.,. It was his case when he was in USA on 21.09.2012 was felt difficulty in urinating and nausea, which was subsequently with complete inability to walk and bladder control issues. The first aid such as intake of lot of water and juice and home remedies did not bring the Complainant to normalcy, as such he was accompanied by his son Sunder Swaminatha to hospital on 22.09.2012. In this regard a letter was also addressed on 22.09.2012 to the claim department, Cori, USA Inc. by his son. He was treated in Dublin Methodist Hospital and was discharged on 29.09.2012. He was diagnosed and treated for one UTI with Sepsis Secondary to e.coli infection and subsequent to UTI, small bowel obstruction. His son continuously made e-mail correspondences with OPs furnished all requirements to reimburse, however for no reasons insurer prolonged and protracted in considering the claim petition and complaint and finally on 02.07.2023 OPs repudiated his claim on the ground that he has not disclosed that he was having diabetes, hypertension and underwent surgery twice for hydrocephalus in the year 2005 & 2009.
4 CC/54/2014
4. It was his case that he was admitted to hospital in USA on 22.09.2012, where never had identified or detected diabetes nor was treated for the same. He was not having hypertension and not had the treatment for the same, more in particular that was diagnosed in USA hospital that he had diabetes and had no connectivity for the alleged diseases. The treatment which he underwent had no interconnectivity for the diabetic, hypertension or surgery. However the OP in order to wriggle out of their liability has attributed untenable reasons has rejected the claim petition which amounts to deficiency in service to a consumer. The complainant has stated was incurred 39,772.75 US dollars towards medical expenses. He being holder of the valid insurance policy is entitled to claim reimbursement as the risk is covered under insurance policy. The OPs are liable to settle the claim and is also entitle for damages to the tune of Rs.10 lakhs. He was made to unnecessary sufferings and causing him unnecessary hardship on account of OPs. Prior to filing this complaint a legal notice was caused and a final notice was also caused, however, the Ops replied with untenable reasons to repudiate the claim form submitted by the Complainant.
5. The OPs have put their appearance through learned counsel, submitted their version, admitting the fact that Mr.Swamynatha 5 CC/54/2014 Rangaswamy had obtained Star Travel Protect Insurance Policy for the period between 04.06.2012 to 01.10.2012 (120 days) from the OP.1. This policy was issued on the basis of proposal form submitted by the Complainant at the time of obtaining policy. The policy issued by the OP.1 was with utmost good faith on the basis of the information provided by the Complainant. The Complainant had past history of diabetes and hypertension, was under
medication before submitting his proposal to obtain policy covering risk for the period from 04.06.2012 to 01.10.2012. OPs have admitted that Complainant was admitted to Dublin Methodist Hospital on 22.09.2012 and was discharged on 30.09.2012 treated for UTI with Sepsis Secondary to e-coli infection and subsequently for UTI Small Bowel obstruction. As per medical transcription report issued by Dublin Methodist Hospital he had past surgical history i.e. shunt -2008 or 2010 placed in Bengaluru, India and was on home medications, it is mentioned as AMARYL (Glimepiride 1 Mg 1 Tab oral Daily). However, Complainant‟s son denied any treatment taken for diabetic mellitus earlier to obtaining the policy from the OPs. The Ops obtained discharge summary issued by Mallya hospital, Bengaluru for the period between 03.10.2004 to 09.10.2004. The past history discloses Complainant was diagnosed as Parkinsonism 3 months back was advised to take sindopa. He
6 CC/54/2014 was treated in the said hospital between 08.07.2005 to 17.07.2005 for difficulty in walking and urinary incontinence since one year and he underwent VP shunt (low pressure valve). Once again admitted to the said hospital from 26.10.2009 to 30.10.2009 with complaints of difficulty in walking, generalised weakness and urge incontinence, since three months and is a known case of diabetic mellitus since 3 months was on Tab GP. He underwent revision of VP shunt under general anaesthesia on 28.10.2009. All these discharge summaries issued by Mallya hospital, Bengaluru where the Complainant took treatment in the year 2004, 2009 and subsequent to his trip to USA in 2014, the OPs sent the discharge summary issued by Dublin Methodist hospital to Agada hospital, Chennai for their opinion. Dr.M.Ravikiran, Consultant Endocrinologist and Dialectologist, after going through the medical records of the Complainant had opined that "the patient had parkinsonism and normal pressure hydrocephalus for which he underwent VP shunt procedure in 2005. Since 2009, presence of diabetes mellitus is recorded. In the recent visit, he was found to have UTI and Sepsis related to E.Coli and his random blood glucose at admission is noted as 107 mg/dl. HbAlc report is not available. In this case E.Coli related UTI appears to be a complication related to pre-existing diabetes mellitus." It is 7 CC/54/2014 therefore, Complainant alleged deficiency in service on their part is denied, since he had suppressed pre-existing disease and obtained policy. He took treatment at Dublin Methodist hospital for the ailment which he was suffering since 2004 is not entitled to seek for reimbursement of medical expenses in a sum USD 39,772.75 equivalent to INR 23,86,365/- as claimed by him and USD which subsequently added during the course of the enquiry of the case. It is their defence have acted well within the agreed terms of the contract of mediclaim insurance policy.
6. In view of rival contentions of parties to the complaint case, Commission held an enquiry and during the course of enquiry parties submitted their affidavit evidence and documents. The Complainant had submitted affidavit evidence and to counter General Manager of Ops submitted affidavit evidence reiterating the contents of defence statement made in their version and through them Ex-C1 to C9 and Ex-R1 to R6 are received and got marked. After closure of enquiry, having heard learned counsels for Complainant and OPs, now the following points are arise for our consideration:
Point No.1: Does the Complainant proves OPs.1 & 2 rendered deficiency in service attributing non-existing reasons to repudiate the claim submitted by him ?
Point No.2: Do OPs have proved Complainant, while obtaining the 8 CC/54/2014 Star Travel Protect Insurance Policy before leaving to USA for holiday had suppressed pre-existing disease and obtained policy in violation of the terms and conditions of the policy and is not entitled to get reimbursement of USD 39,772.75 equivalent to INR 23,86,365/- as on the date of complaint towards medical expenses ?
Point No.3: What order ?
7. Point Nos.1 & 2: These two points are taken together for discussion and determination, since they are co-related each other to avoid repetition of certain facts and circumstances found from the enquiry held by the commission. It is not in dispute as per Ex-C1 Complainant had paid Rs.40,283/- on 02.06.2012 towards premium to obtain CIA Star Travel Protect Insurance covering risk commencing from 04.06.2012 to 01.10.2012. It could be seen the purpose of visit was holiday tour. The insured assigned Mr.Sundar Swaminathan. He is none other son settled in USA. After demise of insured he came on record as his LR and this LR is represented by his GPA, since LR is settled in USA. It is found from the policy complainant was aged 77 years and he expired on 02.12.2018 pending consideration of his claim by the commission. The Sum insured in USD towards Emergency medical expenses M1 2,50,000, Dental emergency assistance M2 250, Personal accident A1 25,000, Loss of checked in baggage T1 500, Loss of passport T2 9 CC/54/2014 250 , Delay of checked in baggage T3 100, Flight delay T4 250, Missed departure/connection T5 200, Trip cancel/interrupt on death of family member T6 2000, Hijack T7 200, Personal liability L1 25000. Thus the policy schedule issued with these benefits, of which, under emergency medical expenses M1 & M4 has claimed.
OP.1 & 2 to obtain this policy he paid gross premium amount of Rs.32,414/- which in fact is not disputed at all. He has produced receipt for having paid Rs.41,183/- as per Ex-C3 to Priyadarshini AIR Wings Pvt., Ltd., dtd.02.06.2012, wherein could see obtaining of travel insurance policy. Ex-4b is a copy of claim of Rangaswamy Swamynatha with policy no.P/14112/4/03/2013/000230. His LR now on record held email correspondences with OPs to claim reimbursement of medical expenses on the basis of Ex-C1a policy schedule, wherein could see informing Ops after he spoke to his father as of date i.e. 2013 told him not taking any drug named Amaryl. He also informed neither he nor any of his family members are aware of he being a diabetic was taking treatment. On the contrary, medical papers obtained from hospital by OPs indicate that Mr.Swamynatha, was under medication for diabetes and he was advised to continue the medicines. In order to substantiate Ops have submitted hospital medical papers of Malya Hospital marked as per Ex-C6/lab reports issued by Department of 10 CC/54/2014 laboratory medicine, while Ex-C7 is cover letter addressed by Claims Department, Coris USA Inc to Mr.Sundar Swamynatha „reason why the insured was taken to emergency care‟ referring the policy issued by Attorneys & Counsellors at Law represented by Dublin Methodist hospital on 01.10.2013 notified to pay unpaid bills within 30 days and enclosed one copy of unpaid bill along with statement. In other words the said hospital issued final notice to Complainant/patient to pay USD 38113.95. Thus these are the documents placed on record by the Complainant to claim medical reimbursement for having taken treatment between 22.09.2012 to 30.09.2012 for UTI with Sepsis Secondary to e.coli infection and subsequent to UTI, small bowel obstruction in Dublin Methodist hospital and spent USD 39,772.75 + USD 1,023.
8. Contrary to the above such evidence, let us examine the documents placed on record by Ops, in order to appreciate the case of the Complainant, to decide, whether he could able to establish OPs have attributed non-existing reasons to reject his claim and their actions or omissions amounting to deficiency in service to a consumer or is also unfair trade practices.
9. Ex-R1 is proposal form filled in by the Complainant before obtaining the policy in question, wherein could see, Mr.Swaminatha Rangaswam, was born on 19.05.1935, was aged 11 CC/54/2014 77 years. He had furnished his legal address with particulars including his cell number and telephone number, proposing Plan C1: USD 250000 towards Star Travel Protect (Individual) worldwide including USA and Canada. It is not in dispute that he had undertaken travel with his relatives to USA where his son, who is subsequently brought on record as his LR is settled. The date of departure from India is mentioned 04.06.2012. The policy was proposed to cover 120 days. In pursuance to Ex-R1/proposal OPs have issued Ex-R2/Star Travel Protect Insurance policy schedule to cover the risk commencing from 04.06.2012 to 01.10.2012. The place of visit is USA and Canada. In so far as, benefits of the policy are concerned already mentioned above, while placing the documents placed on record by the Complainant. Ex-R3 is a discharge summary, issued by Mallya hospital, wherein could see Mr.Swamynatha was aged 69 years, was admitted on 03.10.2004 and was discharged on 09.10.2004. He was admitted with history of „jerky movement right side of the face in the evening followed by loss of consciousness, which lasted for 3-5 minutes‟ „no history of tongue bite, bowel/bladder incontinence, head injury, weakness/ numbness of any side of the body‟. He was consulted by Dr.R.Srinivas and Dr.K.N.Krishna of the said hospital. In this discharge summary could see past history which according to 12 CC/54/2014 OP/insurer, would play vital importance to substantiate their case, since the past history „diagnosed as Parkinson 3 months back was advised to take Syndopa‟ „no prescription for the same, CT scan brain done then, not diabetes mellitus/hypertension/IHD‟. Finally diagnosed „normal pressure hydrocephalus. He was also admitted on 08.07.2005 in the same hospital, surgery was conducted on 13.07.2005 and was discharged on 17.07.2005 and then was aged 70 years, consulted by Dr.Sudhir Pai, Neuro Surgeon and finally diagnosed as „normal pressure hydrocephaluses. The procedure conducted in the said hospital „VP Shunt (low pressure valve)‟ was put. His chief complaint was „difficulty in walking and urinary incontinence since 1 year‟. The past history „not a known case of DM, HTN, TB, Asthma‟. He was a known case of hydrocephalus who had refused surgery earlier, now has presented with low pressure hydrocephalus and symptoms related to it. He underwent VP Shunt on 13.07.2005 under GA. He was treated with medication. He improved symptomatically. He advised for medication at the time of discharge. He was also admitted on 26.10.2009 and discharged on 30.10.2009 and during these integral period on 28.10.2009 procedure was followed, finally it was diagnosed „normal pressure hydrocephalus with blocked VP shunt.‟ The reason for admission was Complainant/patient find 13 CC/54/2014 difficulty in walking/generalised weakness and urge incontinence since 3 months‟. Even could see past history in this discharge summary which according to insurer/OPs would play vital importance, wherein mentioned „known case of diabetes mellitus since 3 months and he was on Tab.GP 1 mg in the morning‟, no history of diabetes mellitus/bronchial asthma/COD/TB, however facts remain that the past history is made mentioned as known case of diabetes mellitus since 3 months which was not disclosed in Ex-R1 proposal before obtaining Ex-R2 Star Travel Protect Insurance policy schedule issued to cover the risk commencing from 04.06.2012 to 01.10.2012 and thus these documents are emphasised to repudiate the medical reimbursement claim of insured Swamynathan by insurer. Even in the said discharge summary could see during 2009 before admission to this hospital, had travelled to USA, arrived on Friday. Procedure „revision of VP shunt under GA on 28.10.2009‟ was conducted which could be seen from operative notes enclosed. Ex-R4 is the discharge summary issued by Dublin Methodist hospital along with patient information, history and physical condition, chart prepared by Emergency department relating to the Complainant commencing from 22.09.2012 to 30.09.2012 and medical transcription report. In this discharge summary, could see, clinical summary. The 14 CC/54/2014 medical transcription report which in fact is not disputed by any of the parties to this complaint showing his admission on 22.09.2012 and discharge as shown was pending on the said date. The past history could be seen „Troponin I above reference range, Diabetes mellitus type 2, Altered mental status, Pneumonia, Bacterial cystitis‟. The past surgical history „shunt either in 2008 or 2010 placed in Bengaluru, India‟. Home medications name: AMARYL (GLIMEPIRIDE) - 1mg -1 tablet - oral - daily and even this was not disclosed by the insured in Ex-R1 proposal. Assessment and plan/recommendations: he presents with 36 hours of weakness with a UTI and an elevated troponin, and with that history he was admitted to Doublin Methodist hospital in USA.
10. The OP/insurer placed Ex-R5/letter dtd.27.06.2013 written by Agada hospital showing „from the records of Mr.Swamynatha Rangaswamy, it is apparent that the patient had Parkinsonism and normal pressure hydrocephalus for which he underwent VP shunt procedure in 2005. Since 2009, presence of diabetes mellitus is recorded. In the recent visit, he was tend to have UTI and Sepsis related to E.Coli. His random blood glucose at admission is noted as 107 mg/dl. HbA1c report is not available. In this case, E.Coli related UTI appears to be a complication related to pre-existing Diabetes Mellitus.‟ This opinion/letter addressed by 15 CC/54/2014 Dr.M.Ravikiran, MD, DM, Consultant Endocrinologist and Dialectologist, Agada Diabetes care, Chennai, forming such opinion on an examination of medical reports which we have stated above placed by OPs would substantiate the contention of Ops that before obtaining Ex-R2/Star Travel Protect Insurance, Complainant has failed to disclose, had pre-existing diabetes mellitus. On the contrary, Complainant failed to prove such opinion by yet another Endocrinologist and Dialectologist to prove that before obtaining the policy did not have pre existing diabetes mellitus or he did not have E.Coli related UTI for which he was treated in USA. It is therefore, Ex-R6 is addressed to the Complainant dtd.02.07.2013 expressed their regret and inability to settle the claim put forth by Complainant.
11. Learned counsel for the Complainant submits that Complainant had earlier suffered for Parkinson disease for which had underwent treatment way back in the year 2004 & 2005 itself. The illness suffered by Complainant during travel is related to gallbladder and the same is nothing to do with diabetes, hypertension and Parkinson‟s diseases and would submit the problem for which was treated in Dublin Methodist hospital, USA is for urine infection and UTI small bowel obstruction which related to gall bladder control issues. Therefore, it cannot be inferred, was due 16 CC/54/2014 to pre-existing disease and this problem of pre-existing disease is in no way connected to the present problem for which he took treatment. The actual fact could be ascertained by the medical experts only and in this case accordingly they had diagnosed and treated for different kind of problem, i.e. urinary infection obstructive bowl movements, is not related to the pre-existing diseases, but facts remain that the policy obtained by the Complainant under Travel Protect Insurance policy terms & conditions is a special policy to cover to protect the risk for 120 days as stated above requires disclosure of even such pre-existing diseases in his proposal Ex-R1 to obtain Ex-R2 as contended by the learned counsel for OPs has some considerable force, since policy is not a Life Insurance Policy and on the contrary Complainant has failed to rebut Ex-R5 the opinion formed by Endocrinologist and Dialectologist of Agada hospital either by examining medical expert to substantiate, that it was not related to diabetes mellitus.
12. Learned counsel for the Complainant placed a decision of Hon‟ble Madurai Bench of Madras High Court reported in 2014-3- LW-763 in the case of Manivasagam vs. The Branch Manager, National Insurance Co., Ltd., and Anrs., dtd.30.01.2014 wherein held in para 9:
17 CC/54/2014
9. If the treatment to the appellant/writ petitioner is relating to diabetes or hypertension, then it is a pre-
existing disease and he is not entitled to reimbursement in terms of the medi claim policy. Since the nature of the treatment is for Coronary Artery Disease, which is not a pre-existing disease even as per the records, the Insurance Company cannot dispute the claim by giving another interpretation on the nature of the disease. There may be many reasons for a pre-existing disease or ailment and it is for the Doctors to identify the disease or ailment and provide the treatment. Under the terms of the medi claim policy, interpretation of a particular disease is not permissible. They are strictly bound by the disease or ailment specified in the policy as pre-existing disease. No addition or deletion by way of interpretation can be done, which is what has happened in the present case. In view of discussion made above and in view of facts and circumstances of the case here in this decision did not come to the assistance of the Complainant, since his treatment in USA in the hospital stated above was related to diabetes mellitus which was corroborated from the experts opinion of Agada Hospital Channai.
13. Learned counsel for Complainant further placed a reliance reported in (2022) 4 SCC 582 in the case of Manmohan Nanda vs. United India Assurance Co., Ltd., and Anr., wherein observed that
31. ........Insurance contracts are special contracts based on the general principles of full disclosure in as much as a person seeking insurance is bound to disclose all material 18 CC/54/2014 facts relating to the risk involved. Law demands a higher standard of good faith in matters of insurance contracts which is expressed in the legal maxim uberrimae fidei.
43. The basic rules to be observed in making a proposal for insurance may be summarized.
72. Further on the disclosures made by the appellant with regard to his existing disease, namely diabetes mellitus to the insurance company considered the same and issued the policy in question to the appellant. The respondent insurance company as a prudent insurer considered the details given by the appellant in the proposal form and issued the policy. The insurance company did not think that the medical and health condition of the appellant was such which did not warrant issuance of a mediclaim policy. The insurance company therefore did not decline the proposal of the assured as a prudent insurer. In our view on facts of the case on hand this decision did not come to the assistance of the Complainant.
14. On the contrary learned counsel for OPs/insurer placed reliance reported in AIR 2020 SC 5210 in the case between Branch Manager, Bajaj Allianz Life Insurance Co., Ltd., and ors., vs. Dalbir Kaur, Civil Appeal/3397/2020 dtd.09.10.2020, wherein held:
9. A contract of insurance is one of utmost good faith. A proposer who seeks to obtain a policy of life insurance is duty bound to disclose all material facts bearing upon the issue as to whether the insurer would consider it 19 CC/54/2014 appropriate to assume the risk which is proposed. It is with this principle in view that the proposal form requires a specific disclosure of pre-existing ailments, so as to enable the insurer to arrive at a considered decision based on the actuarial risk.
(12) The contracts of insurance including the contract of life assurance are contracts uberrima fides and every fact of material (sic material fact) must be disclosed, otherwise, there is good ground for rescission of the contract. The duty to disclose material facts continues right up to the conclusion of the contract and also implies any material alteration in the character of risk which may take place between the proposal and its acceptance. If there is any a mis statement or suppression of material facts, the policy can be called into question. For determination of the question whether there has been suppression of any material facts it may be necessary to also examine whether the suppression relates to a fact which is in the exclusive knowledge of the person intending to take the policy and it could not be ascertained by reasonable enquiry by a prudent person."
(25) The upshot of the entire discussion is that in a contract of insurance, any fact which would influence the mind of a 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 20 CC/54/2014 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."
11. ......the failure of the insured to disclose a previous insurance policy as required under the policy proposal form would not influence the decision of a prudent insurer to issue the policy in question and therefore the insurer was disentitled from repudiating its liability. (30) It is standard practice for the insurer to set out in the application a series of specific questions regarding the applicant's health history and other matters relevant to insurability. The object of the proposal form is to gather information about a potential client, allowing the insurer to get all information which is material to the insurer to know in order to assess the risk and fix the premium for each potential client. Proposal forms are a significant part of the disclosure procedure and warrant accuracy of statements. Utmost care must be exercised in filling the proposal form. In a proposal form the applicant declares that she/he warrants truth. The contractual duty so imposed is such that any suppression, untruth or inaccuracy in the statement in the proposal form will be considered as a breach of the duty of good faith and will render the policy voidable by the insurer. The system of adequate disclosure helps buyers and sellers of insurance policies to meet at a common point and narrow down the gap of information asymmetries. This allows the parties to serve their interests better and understand the true extent of the contractual agreement.
21 CC/54/2014 (31) The finding of a material misrepresentation or concealment in insurance has a significant effect upon both the insured and the insurer in the event of a dispute. The fact it would influence the decision of a prudent insurer in deciding as to whether or not to accept a risk is a material fact. As this Court held in Satwant Kaur (supra) "there is a clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance". Each representation or statement may be material to the risk. The insurance company may still offer insurance protection on altered terms."
15. Learned counsel for OP further relied on the decision in Civil Appeal/3359/2019 of the Hon‟ble Supreme Court of India in the case of Oriental insurance company ltd., vs. Mahendra Construction, dtd.01.04.2019, wherein held:
11. .......Insurance is governed by the principle of utmost good faith, which imposes a duty of disclosure on the insured with regard to material facts. In MacGillivray on Insurance Law3 the rule concerning duty of disclosure is stated in the following terms:
"[Subject to certain qualifications considered below], 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 or 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 22 CC/54/2014 induced the making of the contract on the relevant terms..."
(7) ..... It is well settled that a contract of insurance is contract uberrima fides and there must be complete good faith on the part of the assured. The assured is thus under a solemn obligation to make full disclosure of material facts which may be relevant for the insurer to take into account while deciding whether the proposal should be accepted or not.
(12) ..... The contracts of insurance including the contract of life assurance are contracts uberrima fides and every fact of material (sic material fact) must be disclosed, otherwise, there is good ground for rescission of the contract. The duty to disclose material facts continues right up to the conclusion of the contract and also implies any material alteration in the character of the risk which may take place between the proposal and its acceptance. If there are any misstatements or suppression of material facts, the policy can be called into question. For determination of the question whether there has been suppression of any material facts it may be necessary to also examine whether the suppression relates to a fact which is in the exclusive knowledge of the person intending to take the policy and it could not be ascertained by reasonable enquiry by a prudent person."
13. ..........But, that apart, it is evident on a bare reading of the proposal form that material information which was required to be disclosed was suppressed by the insured. The proposal form contains a declaration of the insured that the statements which are made are true to the 23 CC/54/2014 knowledge of the proposer and the declaration forms the basis of the contract with the insurer.
It is therefore, the duty to disclose material facts continues right up to the conclusion of the contract. As such, on facts herein this case, Complainant has to be held failed to disclose pre-existing diabetic mellitus in his proposal before issuance of policy schedule to cover Travel Protect while in USA, Canada.
16. Learned counsel for OP further placed reliance reported in (2009) 8 SCC 316 in the case of Satwant Kaur Sandhu vs. New India Assurance Co., Ltd., dtd.10.07.2009, wherein held Sec.45 of Insurance act, 1938 applies only in the case of Life Insurance Policy not applicable in case of mediclaim policy which is entirely different from Life Insurance Policy is directly bearing on the point in dispute between parties to the complaint. In this decision, in it was held:
18. A mediclaim policy is a non-life insurance policy meant to assure the policy holder in respect of certain expenses pertaining to injury, accidents or hospitalizations.
Nonetheless, it is a contract of insurance falling in the category of contract uberrimae fidei, meaning a contract of utmost good faith on the part of the assured. Thus, it needs little emphasis that when an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a true and 24 CC/54/2014 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.
19. In United India Insurance Co. Ltd. Vs. M.K.J. Corporation, 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 believing the contrary.
20 "...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."
21. ......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;
25 CC/54/2014 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 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."
Having said so, as noted above, the next question for consideration would be as to whether factum of the said illness was a "material" fact for the purpose of a mediclaim policy and its non-disclosure was tantamount to suppression of material facts enabling the Insurance Company to repudiate its liability under the policy?
22. 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".
26 CC/54/2014
24. ........2(1)(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.
25. The upshot of the entire discussion is that in a Contract of Insurance, any fact which would influence the mind of a 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.
27 CC/54/2014
17. In view of above proposition of law laid down by the Hon‟ble Apex Court in the matter of mediclaim policy parties to the complaint are strictly bound by terms and conditions of the policy and when it is shown being violated by insured before obtaining the policy insurer has to be held justified to turn down the claim of the insured. In this case it is shown by the insurer that insured failed to disclose pre-existing disease in his proposal form as the contract of insurance based on utmost good faith has to be held violation of the terms and conditions of the policy. The insured must correctly share all material facts. As such repudiation or rejection of mediclaim in respect of Complainant for the reasons recorded in Ex-R6 has to be held justified. Accordingly findings on these two points go against the Complainant. In the result commission proceed to dismiss the complaint with no order as to cost.
18. Supply free copy of this order to both the parties.
Lady Member Judicial Member
*NS*