State Consumer Disputes Redressal Commission
National Insurance Co. vs Smt. Swaraj Jain on 26 July, 2007
BEFORE THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION, BEFORE THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION, RAJASTHAN JAIPUR Appeal No.87/2007 National Insurance Co.Ltd. V/s Smt.Swaraj Jain 26.7.2007 Honble Mr.Justice Sunil Kumar Garg, President Shri T.P.Gupta,Member
Smt.Vimla Sethia, Member Mr.Vizzy Agarwal for the appellant.
Mr.B.B.Sharma for the respondent.
Per Honble Mr.Justice Sunil Kumar Garg,President This appeal under section 15 of the Consumer Protection Act, 1986 (hereinafter referred to as the Act of 1986) has been filed by the appellant against the order dated 23.11.2006 passed by the learned District Forum, Udaipur in case no.12/2000 by which the complaint filed by the complainant-respondent under section 12 of the Act of 1986 was allowed in the manner that the appellant was directed to pay to the complainant respondent a sum of Rs.1,04,500/- alongwith interest @ 8% p.a. from the date of repudiation letter i.e. 28.2.2000 till payment was made and Rs.2500/- as cost of litigation.
2. It may be stated here that on 18.12.1999, the complainant-respondent had filed a complaint under section 12 of the Act of 1986 before the District Forum, Udaipur stating inter-alia that her husband Rajendra Kumar Jain (hereinafter referred to as the deceased) had first taken medi claim policy on 2.4.1996 from the appellant-Insurance Company for the period from 2.4.1996 to 1.4.1997 and that policy was got renewed by the deceased from the appellant on 2.4.1997 for the period from 2.4.1997 to 1.4.1998 and thereafter, on 2.4.1998, that policy was again got renewed by the deceased from the appellant for the period from 2.4.1998 to 1.4.1999 and in that policy, the sum assured was Rs.95,000/- and cumulative bonus of Rs.9500/-. It was further stated in the complaint that even third time the policy in question was renewed by the appellant after making enquiry regarding health of the deceased. It was further stated in the complaint that on 5.7.1998, the deceased felt pain in chest and therefore, he was got admitted in RNT Medical College and Maharana Bhupal Government Hospital, Udaipur where he remained upto 10.7.1998 and many tests were got done there and since deceased did not feel relief, therefore, he was taken to Escort Heart Institute & Research Centre, New Delhi, where he was got admitted on 24.7.1998 and discharged on 6.8.1998 and a sum of Rs.1,88,000/- were spent by the deceased in taking treatment at Escort Heart Institute, New Delhi, but unfortunately, deceased had died on 6.8.1998 at New Delhi. After death of the deceased, a claim was preferred by the complainant respondent being wife and nominee of the deceased, but that claim was repudiated by the appellant through letter dated 28.2.2000, the contents of which read as follows:-
This has reference to captioned claim on the policy. We regret to inform you that on the basis of papers submitted by you and as per terms, conditions and exclusion under the captioned issued policy the medi claim submitted by you is not maintainable.
The said Heart ailment for which the claim was lodged has been found to be pre-existing as per the summary report dt.6.8.1998 of Escort Heart Institute & Research Centre, New Delhi. In terms of exclusions under the policy the Company is not liable to pay for all diseases/injuries which are pre-existing when the cover incepts for the first time.
Thereafter, the present complaint was filed by the complainant respondent.
3. A reply was filed by the appellant-Insurance Company on 26.2.2001 and the appellant took the same plea, which was taken by it in the repudiation letter dated 28.2.2000. Apart from this, it was further submitted by the appellant that as per discharge ticket of RNT Medical College and Maharana Bhupal Government Hospital, Udaipur, it was clear that deceased was suffering from Hyper tension, Diabetes Mellitus with coronary artery disease for the last ten years. Thus, deceased was having heart trouble before issuance of the first medi claim policy on 2.4.1996, but he deliberately concealed that fact. Furthermore, as per the death summary of Escort Heart Institute, New Delhi, the deceased was not only suffering from hyper tension, diabetes mellitus Type II and Ischemic Heart Disease, but he had also suffered an anteroseptal wall myocardial infarction 14 years back and these facts were deliberately not disclosed by the deceased at the time of taking the first medi claim policy on 2.4.1996 and thus, it was a case of suppression of material facts regarding health and on that ground, the claim was rightly repudiated by the appellant through letter dated 28.2.2000 and the present complaint deserves to be dismissed.
4. After hearing the parties, the learned District Forum, Udaipur through order dated 23.11.2006 allowed the complaint of the complainant-respondent in the manner as indicated above holding inter-alia:
(i) That it was the duty of the appellant to prove the fact that at the time of taking the first medi claim policy on 2.4.1996, the deceased was patient of heart, but that fact had not been proved by the appellant and merely because in the bed head ticket of RNT Medical College, Udaipur and in the death summary of Escort Heart Institute, New Delhi, it was mentioned that deceased was patient of heart for the last so many years, that would not be sufficient proof unless and until the concerned doctors, who had made these entries, had been produced. To corroborate these entries that deceased was patient of heart for the last so many years and prior to taking policy on 2.4.1996, no cogent and reliable evidence including hospital papers, affidavits of doctors, who made entries, had been produced by the appellant.
(ii) That the appellant had failed to prove the fact that at the time of issuance of first medi claim policy on 2.4.1996, the deceased was aware that he was suffering from the disease of heart,
(iii) That repudiation of claim of the complainant respondent by the appellant was not justified and it amounted to deficiency in service on the part of the appellant.
5. Aggrieved from the said order dated 23.11.2006 passed by the learned District Forum, Udaipur, the appellant-Insurance Company has preferred this appeal.
6. In this appeal, the main contention of the learned counsel for the appellant is that from the death summary of Escort Heart Institute, New Delhi and from the discharge ticket of RNT Medical College, Udaipur, the fact that the deceased was heart patient for the last so many years is well established and though the deceased was aware of the fact that he was suffering from heart disease, but he deliberately did not disclose it in the declaration form filled in up by him at the time of taking first medi claim policy on 2.4.1996 and thus, it was a case of suppression of material facts regarding health on the part of deceased and on that ground, claim of the complainant respondent was rightly repudiated by the appellant and the learned District Forum has committed serious error and illegality in decreeing the claim of the complainant respondent. The findings of the learned District Forum are wholly erroneous, illegal and perverse one and therefore, the same cannot be sustained and liable to be set aside and this appeal deserves to be allowed.
7. On the other hand, the learned counsel appearing for the respondent-complainant has supported the impugned order of the learned District Forum.
8. We have heard the learned counsel appearing for the appellant and the learned counsel appearing for the respondent and gone through the entire materials available on record.
9. There is no dispute on the point that deceased had first taken medi claim policy on 2.4.1996 from the appellant for the period from 2.4.1996 to 1.4.1997 and thereafter, that policy was got renewed by the deceased on 2.4.1997 for the period from 2.4.1997 to 1.4.1998 and thereafter, on 2.4.1998, that policy was again got renewed by the deceased for the period from 2.4.1998 to 1.4.1999 and in that policy, the sum assured was Rs.95,000/- and cumulative bonus of Rs.9500/-.
10. There is also no dispute on the point that at the time of taking first medi claim policy on 2.4.1996 and also at the time of seeking renewal of policy on 2.4.1997 and 2.4.1998, the deceased had filled in up declaration form regarding health in which he had stated that he was not suffering from any disease including heart.
11. There is also no dispute on the point that deceased was got admitted in RNT Medical College and Maharana Bhupal Government Hospital, Udaipur on 5.7.1998 and he was discharged on 10.7.1998 where disease of heart was diagnosed. In the discharge ticket, it was also mentioned in past history that deceased was suffering from hyper tension, diabetes mellitus with coronary artery disease for the last ten years.
12. There is also no dispute on the point that thereafter, the deceased was got admitted in Escort Heart Institute, New Delhi on 24.7.1998 where angiography was done on 25.7.1998 and Echo and Doppler was done on 27.7.1998 and by pass surgery was done on 5.8.1998 and deceased had died on 6.8.1998 in the Escort Heart Institute, New Delhi. In the death summary of Escort Heart Institute, New Delhi, it was mentioned that deceased was having hyper tension and diabetes mellitus since last 7 years and deceased suffered antero-septal wall myocardial infarction 14 years back.
13. Thus, in the facts and circumstances just narrated above, the question for consideration is whether repudiation of claim of complainant-respondent by the appellant on ground of suppression of heart disease was justified or not or whether the findings of the learned District Forum decreeing the claim could be sustained or not.
On Medi claim policy
14. In United India Insurance Co.Ltd. V/s Mohanlal Aggarwal (2004 ACJ 1657), the Division Bench of the Gujarat High Court has laid down the following six principles in respect of medi claim policy:-
(i) The insured has an option under the existing medi claim insurance policy to continue the cover by payment of renewal premium in time in respect of the sum insured.
(ii) In case of renewal without break in the period, the medi claim insurance policy will be renewed without excluding any disease already covered under the existing policy which may have been contracted during the period of the expiring policy.
Renewal of medi claim insurance policy cannot be refused on the ground that the insured had contracted disease during the period of the expiring policy so far as the basic sum insured under the existing policy is concerned.
(iii) In cases where the insured seeks an enhancement of the amount of sum insured at the time of renewal, the option to renew will not extend to the amount of such enhancement and renewal in respect thereof will depend upon the mutual consent of the contracting parties.
(iv) Renewal of a medi claim insurance policy cannot be refused, despite timely payment of the renewal premium, on the ground that continuance of the cover would become more onerous or burdensome for the insurer due to the insured contracting a covered disease during the period of the existing policy.
(v) The insurer may refuse renewal, even in cases where the insured has an option to renew the policy on payment of the renewal premium in time, on the grounds, such as, misrepresentation, fraud or non-disclosure of material facts that existed at the inception of the contract and would have vitiated the contract of insurance at its inception or non-fulfilment of obligations on the part of the insured or any other ground on which the performance of the promise under the contract is dispensed with or excused under the provisions of the Contract Act or any other law or when the insurer has stopped doing business.
(vi) The Government insurance companies continue to be State within the meaning of Article 12 of the Constitution notwithstanding the entry of private companies in the field of general insurance, ending their monopoly by virtue of insertion of section 24A in the Act of 1972 and they cannot arbitrarily cancel or refuse to renew an existing medi claim policy.
15. A bare perusal of above principal no.(v) reveals that claim could be repudiated by the Insurance Company on the grounds of misrepresentation, fraud or non-disclosure of material facts that existed at the inception of the contract.
On suppression of material facts
16. It may be stated here that it is the fundamental principle of insurance law that utmost good faith must be observed by the contracting parties and good faith forbids either party from non-disclosure of the facts which the parties known. The insured has a duty to disclose and similarly it is the duty of the insurance company and its agents to disclose all material facts in their knowledge since obligation of good faith applies to both equally and in this respect, the decision of the Honble Supreme Court in M/s Modern Insulators Ltd. V/s Oriental Insurance Company (AIR 2000 SC 1014) may be referred to.
17. The onus probandi, in cases of fraudulent suppression of material facts rests heavily on party alleging fraud namely the insurer. In this respect, the decision of the Honble Supreme Court in LIC V/s Smt.G.M.Channabasemma (1996 (III) CPJ 8 (SC)) may be referred to where it was held that the burden of proving that the insured had made false representation and suppressed material facts is undoubtedly on the Life Insurance Corporation of India. Furthermore, mere concealment of some facts will not amount to concealment of material facts and if there is fraudulent suppression of material facts in the proposal, the policy could be vitiated otherwise not.
18. Suppression of fact must be a conscious operation of the giver of the answer which he knowingly did not disclose.
19. The Honble National Commission in National Insurance Co.Ltd. V/s Bipul Kunda (2005 CTJ 377 (CP) (NCDRC)) has held that for repudiating a claim of an insured, it is for the insurer to show that a statement on a fact, which was material for the policy, had been suppressed by the insured and that statement was fraudulently made by him/her with the knowledge of the falsity of that statement.
20. The word misrepresentation means suggestio falsi, in matter of substance essentially material to the subject, whether by acts or by words, by manoeuvres, or by positive assertions or material concealment (suppressio veri) whereby a person is misled and damnified.
21. The word fraud means a conduct either by letter or words, which induces the other person, or authority to take a definite determinative stand as a response to the conduct of former either by word or letter. In this respect, the decision of the Honble Supreme Court in Ram Preeti Yadav V/s UP Board of High School and Intermediate Education and ors. (JT 2003 (Supp.I) SC 25) may be referred to.
22. It is also well settled that misrepresentation itself amounts to fraud in some cases.
23. The word Misconduct means an act or conduct in the nature of a breach of trust or an act resulting in loss to other party.
24. The word suppression of fact envisages a deliberate or conscious omission to state of fact with the intention of deriving wrongful gain. In this respect, the decision of the Honble Supreme Court in Collector of Customs Calcutta V/s Tin Plate Co. of India Ltd. ((1997) 10 SCC 538) may be referred to.
25. Keeping the above legal position in mind, the facts of the present case are being examined.
26. In this case, no doubt as per discharge ticket of RNT Medical College and Maharana Bhupal Government Hospital, Udaipur, in the past history, it was written that deceased was suffering from the disease of heart for the last 10 years and in the death summary of Escort Heart Institute, New Delhi, it was further mentioned that deceased was suffering from heart disease and he has also suffered anteroseptal wall myocardial infarction 14 years back, but there is nothing on record to show that before taking the first medi claim policy on 2.4.1996, the deceased had taken treatment of heart in any hospital or had consulted any medical man for treatment of heart.
27. In our considered opinion, since there is no documentary proof or evidence available on record to show that the deceased was admitted in any hospital or consulted any medical man for treatment of disease of heart prior to filling in up the declaration form for taking first medi claim policy on 2.4.1996, therefore, it cannot be said that the deceased was guilty of suppression of material facts about health. No doubt in the discharge ticket of RNT Medical College, Udaipur and in the death summary of Escort Heart Institute, New Delhi, it was mentioned in past history that deceased was suffering from disease of heart for the last 10 years and he suffered anteroseptal wall myocardial infarction 14 years back, but to corroborate and prove these entries, no cogent and reliable documentary proof or evidence or material has been produced by the appellant showing that the deceased had earlier taken treatment of heart disease in any hospital. The appellant had failed to produce any document or paper to show that deceased had taken treatment of heart disease prior to taking the first medi claim policy on 2.4.1996 and therefore, it cannot be said that it was a case of suppression of material facts regarding health on the part of the deceased.
28. Apart from this, it may be stated here that the past history recorded in the bed head ticket of hospital could not be treated as primary piece of evidence to prove any fact until and unless the doctor who had recorded that history had been produced and primary evidence would be of the doctor, who had recorded the information in the bed head ticket. For that, the law laid down by the Honble National Commission in LIC V/s Dr.P.S.Agarwal (2005 NCJ 181 (NC)) may be referred to. In this case, the doctor who had recorded the previous history had not been produced and therefore, no reliance could be placed on past history recorded in discharge ticket.
29. Furthermore, for diagnosing the heart disease, some necessary tests are ECG, Echo, Doppler, Angiography etc. and until and unless they are done, heart disease could not be diagnosed. In this case, there is nothing on record to suggest that prior to taking the first medi claim policy on 2.4.1996, the deceased had undergone any of the above tests. Some tests for the first time were got done at RNT Medical College and Maharana Bhupal Government Hospital, Udaipur when deceased was admitted in that hospital on 5.7.1998 and similarly, angiography was done on 25.7.1998 and echo and Doppler was done on 27.7.1998 when deceased was admitted in Escort Heart Institute, New Delhi on 24.7.1998. Since there is nothing on record to show that deceased had undergone any of the above tests especially angiography or echo, prior to taking the first medi claim policy on 2.4.1996, therefore, it cannot be said that deceased was aware of the fact that he was suffering from heart disease at the time of taking first medi claim policy on 2.4.1996. Thus, if the deceased had not disclosed in his declaration form while taking first medi claim policy on 2.4.1996 that he was suffering from heart disease, it cannot be said that he was guilty of suppression of material facts.
30. Had there would have been any evidence that deceased had taken treatment of heart disease prior to 1996 from any hospital or medical man, the position would have been different one.
31. For the reasons stated above, the appellant was not justified in repudiating the claim of the complainant-respondent on the ground of suppression of material facts regarding heart disease by deceased and the appellant has repudiated the claim of the complainant-respondent without any basis and on wrong assumption and in an arbitrary manner and repudiation of claim amounted to deficiency in service on the part of the appellant and the learned District Forum has rightly held so. The findings of the learned District Forum decreeing the claim are based on correct appreciation of entire materials and evidence available on record and they do not suffer from any basic infirmity or illegality or perversity. Hence, no interference is called for with the same and this appeal deserves to be dismissed.
Accordingly, this appeal filed by the appellant is dismissed.
(Vimla Sethia) (T.P.Gupta) (Justice Sunil Kumar Garg) Member Member President