State Consumer Disputes Redressal Commission
New India Assu. Co. Ltd. vs Ashwani Arora on 12 December, 2022
FA/406/2014 NEW INDIA ASSURANCE CO. LTD. VS. MR. ASHWINI ARORA D.O.D. : 12.12.2022
IN THE DELHI STATE CONSUMER DISPUTES
REDRESSAL COMMISSION
Date of Institution: 26.04.2014
Date of hearing: 21.09.2022
Date of Decision: 12.12.2022
FIRST APPEAL NO.- 406/2014
IN THE MATTER OF
NEW INDIA ASSURANCE CO. LTD.,
DRO-II, SCOPE MINAR,
10TH FLOOR, LAXMI NAGAR,
NEW DELHI-110092
(Through: Dr. Sushil Kumar Gupta, Advocate)
...Appellant
VERSUS
1. MR. ASHWINI ARORA,
(THROUGH LRs),
2. MS. ANJU ARORA,
W/O LATE MR. ASHWINI ARORA,
3. MR. SUDHANSHU ARORA,
S/O LATE MR. ASHWINI ARORA,
4. MISS GARIMA ARORA,
D/O LATE MR. ASHWINI ARORA
ALL AT:
B-141, NARAINA VIHAR,
NEW DELHI-110028.
(Through: Mr. Amit Kumar, Advocate)
... Respondents
DISMISSED PAGE 1 OF 9
FA/406/2014 NEW INDIA ASSURANCE CO. LTD. VS. MR. ASHWINI ARORA D.O.D. : 12.12.2022
CORAM:
HON'BLE JUSTICE SANGITA DHINGRA SEHGAL
(PRESIDENT)
HON'BLE MS. PINKI, MEMBER (JUDICIAL)
Present: None for the parties.
PER: HON'BLE JUSTICE SANGITA DHINGRA SEHGAL,
PRESIDENT
JUDGMENT
1. The facts of the case as per the District Commission record are:
"This complaint has been filed with the allegation that the Complainant No.1 had obtained a Good Health Policy under Certificate No. GH APR 09 006670 from Respondent No.1 for a period from 01/04/2009 to 31/03/2010 for a sum of Rs. 3,00,000/- including cumulative bonus of 10% of the total sum insured. This policy also covers Personal Accident Benefit to the tune of Rs. 4,00,000/-. The complainant was taken ill and, therefore, had to be hospitalised from 08/06/09 to 12/06/09 where he was treated for acute anaemia and bill of Rs. 41,102/- was raised. In the last week of July'09 again Complainant No.1 needed medical attention and he was admitted at Jeewan Nursing Home & Hospital, where he underwent intensive medical treatment. He was discharged on 16/08/09. He was found to be suffering from Advanced Azotemia, Anaemia with Enteric Fever. The entire medical expenses were Rs.2,19,764/-. Out of this, a sum of Rs. 1,24,185/- was spent on the hospital while the remaining for purchase of medicines. The complainant filed the claim of Rs.2,60,866/- with the Respondent No.1 and submitted all the necessary documents. The claim was rejected vide letter dated 26/08/09 on the ground that the disease was pre-existing. On several enquiries with Respondent No.2, they asked by their letter dated 24/09/09 to submit the documents. The rejection is wholly illegal. The Complainant No.1 died on 25/08/11 when this complaint was pending."
DISMISSED PAGE 2 OF 9 FA/406/2014 NEW INDIA ASSURANCE CO. LTD. VS. MR. ASHWINI ARORA D.O.D. : 12.12.2022
2. The District Forum after taking into consideration the material available on record passed the order dated 18.12.2013, whereby it held as under:
"On perusal of the pleadings of the parties it is found in the written statement that the Respondent under the same policy of insurance is prepared to reimburse the claim of the complainant to the extent of Rs. 1,27,032/- which according to them pertains to Enteric Fever as the expenses related to DM/HTN/CKD/Anaemia are not payable. In such circumstances, the burden shifts upon the respondent to firstly prove that how they segregate the amount spent for Enteric Fever from the diseases which are according to them not covered by the policy of insurance.
We have gone through the documents filed on record from the side of the complainant including the certificate issued by the Fortis Hospital which has been filed by the respondent, which nowhere says that the amount noted above was spent on the treatment of Enteric Fever. The Discharge Summary of the Jeevan Nursing Home reflects that primarily the patient was treated for DM II KAD/Advanced Anaemia and Enteric Fever. These documents are also silent regarding the expenses occurred on different diseases same is the case in relation to the documents of the Fortis Hospital. In these circumstances, the case taken up by the respondent appears to be a device to curtail the legitimate claim of the complainant. Here, the question will arise when the respondent company in the same policy can pay the claim partly how they can refuse the claim partly how they can refuse the claim of the treatment taken by the patient under the same policy at the same time for any other disease? If it is so, any existence at the time of the purchase of the policy then in that case, it was the responsibility of the respondent to have specifically mentioned in the policy documents that the diseases from which the insured is suffering shall not be covered and shall not be granted benefit under the policy purchased. When the company knowing it fully well or not knowingly insured the claimant and the patient was admitted for the first time in the hospital for DISMISSED PAGE 3 OF 9 FA/406/2014 NEW INDIA ASSURANCE CO. LTD. VS. MR. ASHWINI ARORA D.O.D. : 12.12.2022 the disease which was not covered by pre-existing clause and the disease, if any, was pre-existing and thereafter further aggravated will it be possible for the respondent to take the plea that the claim of the claimant is not payable. We don't find any substance in the plea raised by the respondent. When the policy document says that the claimant, now the deceased, was covered in respect of the Personal Accident for a sum of Rs.4,00,000/- and in the medi-claim for a sum of Rs. 3,00,000/-. In such circumstances, the complainant was entitled to the reimbursement up to the limit of Rs. 3,00,000/-. The claim put forth by him is only Rs. 2,60,866/- which is within the limit of the medi-claim payable. In the present case, since the death has occurred, normally the insurance company should pay the entire Rs. 3,00,000/- to the complainant LRs who have been substituted in this complaint. The rejection of the claim of the complainant in the above circumstances is fully unjustified. The respondent is directed to pay to the complainant LRs a sum of Rs. 2,60,866/- together with interest @12% p.a thereon from the date of filing of this complaint till it finally paid. We, further, award a sum of Rs. 50,000/- as compensation on account of the harassment, mental pain and agony and this amount shall also include the cost of this litigation."
3. Aggrieved by the aforesaid order of the District Commission, the Appellant/Opposite Party has preferred the present Appeal contending that the District Commission failed to appreciate the fact that the Respondent was detected as a known case of Diabetes Mellitus II and CAD with Acute Anaemia with ESRD with lipidemia with hypertension which falls under the exclusion clause 4.1 of the Terms & Conditions of the said policy. Moreover, the Respondent was suffering from the said disease from the past 20 years which was not disclosed at the time of filling of the proposal form by the Respondent. Pressing the aforesaid contentions, the DISMISSED PAGE 4 OF 9 FA/406/2014 NEW INDIA ASSURANCE CO. LTD. VS. MR. ASHWINI ARORA D.O.D. : 12.12.2022 Appellant prayed for setting aside the order of the District Commission.
4. The Respondent, on the other hand failed to file the reply to the present Appeal even after been given multiple opportunities.
5. We have perused the material available on record.
6. The only question for consideration is whether the claim of Respondent falls under the exclusion clause 4.1 of the terms & conditions of the said policy and therefore not maintainable in accordance with the terms and conditions of the policy.
7. To deal with this issue, clause 4.1 has been reproduced below:
"4.1 All illness/diseases/defects/injuries/surgical intervention, which are pre-existing when the cover incepts for the first time and any subsequent complications thereof will be excluded. For this purpose, the policy commencing from a date after a break in earlier policy, either with this company or any other insurance company in India, will be treated as a fresh policy and illness/disease/defect/injury contracted during earlier policy period or break period will be treated as pre-existing and will be excluded from the scope of cover. If the policy is to be renewed for enhanced sum insured, as a continuation of the earlier policy either with this company or with any other insurance company in India, then the restriction as applicable to a fresh policy will apply to the additional sum insured, as if a separate policy has been issued for the same."
8. On perusal, we find that the treatment taken by the Appellant was for "Type II DM/CKD/CAD/HTN/Dyslipidimia". The counsel for the Appellant submitted that the claim of the Respondent was repudiated vide letter dated 26.08.2009 on the ground that the claim is medically repudiated as per the clause 4.1 since pre- existing disease and its complications are not payable by insurance company.
DISMISSED PAGE 5 OF 9 FA/406/2014 NEW INDIA ASSURANCE CO. LTD. VS. MR. ASHWINI ARORA D.O.D. : 12.12.2022
9. It is further noted that, when the said policy issued from 01.04.2009 to 31.03.2010, which was treated as fresh policy by Appellant, it was under the liability to follow all the formalities like filling up of proposal form, medical tests, etc. which are required before issuing fresh policy to the insured. However, in the present case, it was duty of the Appellant to furnish all the information regarding the exclusion clause about the pre-existing disease to the Respondent. Furthermore, no intimation has been given by the Appellant (insurance company) regarding the said exclusion clause neither any documentary proof about the said medical test has been shown before issuing the aforesaid policy.
10. A striking feature of insurance law is the principle of uberrima fide (duty of utmost good faith) which applies to both the insured as well as one who seeks indemnity and cover. In United India Insurance Co. Ltd. v. M.K.J. Corpn. 111996 (6) SCC 428 court underlined the importance of this principle, and its application to the insurer, in the following terms:
"It is a fundamental principle of Insurance law that utmost good faith must be observed by the contracting parties. Good faith forbids either party from concealing (non-disclosure) what he privately knows, to draw the other into a bargain, from his ignorance of that fact and his believing the contrary. Just as the insured has a duty to disclose, similarly, it is the duty of the insurers and their agents to disclose all material facts within their knowledge, since obligation of good faith applies to them equally with the assured. The duty of good faith is of a continuing nature. After the completion of the contract, no material alteration can be made in its terms DISMISSED PAGE 6 OF 9 FA/406/2014 NEW INDIA ASSURANCE CO. LTD. VS. MR. ASHWINI ARORA D.O.D. : 12.12.2022 except by mutual consent. The materiality of a fact is judged by the circumstances existing at the time when the contract is concluded."
11. Whereas, in Modern Insulators Ltd. v Oriental Insurance Co.
Ltd. Hon'ble Supreme Court held 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 know. 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 the obligation of good faith applies to both equally."
12. The universal applicability of the principle of uberrima fides to both parties to a contract of insurance and in the context of omission of one of them (the insurer) to notify the other, about a terms & conditions, at the stage of pre-contract.
13. In view of the state of law, which is, that the insurer was under a duty to disclose any exclusion clause in the terms of the contract of insurance, at the formation stage (or as in this case, at the stage of renewal), the insurer cannot assume that the insured were under an obligation to satisfy themselves, if a new term had been introduced. If one considers the facts of this case, just before the renewal premium was furnished the insurer, or its agent was under
a duty to alert the insurer that the change in terms was likely to impact their decision, and if so required, offer a better or fuller coverage.
14. One cannot be oblivious to two circumstances here. The first is that medical or health insurance cover becomes crucial with DISMISSED PAGE 7 OF 9 FA/406/2014 NEW INDIA ASSURANCE CO. LTD. VS. MR. ASHWINI ARORA D.O.D. : 12.12.2022 advancing age; the policy holder is more likely to need cover; therefore, if there are freshly introduced limitations of liability, the insured may, if advised properly, and in a position to afford it, seek greater coverage, or seek a different kind of policy. The second is that most policies - health and medical insurance policies being no exception, are in standard form. It would be worthwhile to notice at this stage that one who seeks coverage of a life policy/personal risk, such as accident or health policy has little choice but to accept the offer of certain standard term contracts - which are termed as "contracts d' adhesion", a French legal term which has been defined as "A standard-form contract prepared by one party, to be signed by the party in a weaker position, usually a consumer, who has little choice about the terms".
15. From the above facts, it is clear that repudiation of the claim on basis of said exclusion clause 4.1 is erroneous in accordance with the facts of present case. In addition, the said clause is extremely one sided, grossly favouring one interest group against others. Such unfair terms in a contract, cannot be enforced, if there is absence of free choice, on the part of a consumer. The Appellant or any person or authority in the field of insurance owe a public duty to evolve their policies subject to such reasonable, just and fair terms and conditions accessible to all the segments of the society for insuring the lives of eligible persons. The eligibility conditions must be conformable to the Preamble, Fundamental Rights and the Directive Principles of the Constitution. Hence, the contention of the Appellant holds no merits.
16. Consequently, we are in agreement with the reasons given by the District Commission and fail to find any cause or reasons to DISMISSED PAGE 8 OF 9 FA/406/2014 NEW INDIA ASSURANCE CO. LTD. VS. MR. ASHWINI ARORA D.O.D. : 12.12.2022 reverse the findings of the District Commission. Therefore, we uphold the order dated 18.12.2013 passed by the District Consumer Disputes Redressal Forum (East), Saini Enclave, Delhi - 110092.
17. Application(s) pending, if any, stand disposed of in terms of the aforesaid judgment.
18. A copy of this judgment be provided to all the parties free of cost as mandated by the Consumer Protection Act, 1986. The judgment be uploaded forthwith on the website of the commission for the perusal of the parties.
19. File be consigned to record room along with a copy of this Judgment.
(JUSTICE SANGITA DHINGRA SEHGAL) PRESIDENT (PINKI) MEMBER (JUDICIAL) Pronounced On:
12.12.2022 DISMISSED PAGE 9 OF 9