State Consumer Disputes Redressal Commission
New India Assurance Co. Ltd vs Suresh Chand Mittal on 20 February, 2008
IN THE STATE COMMISSION:DELHI IN THE STATE COMMISSION: DELHI (Constituted under Section 9 of The Consumer Protection Act, 1986) Date of Decision: 20-02-2008 Appeal No. FA-08/31 (Arising out of Order dated 05-10-2007 passed by the District Forum (North), Tis Hazari, Delhi, in Complaint Case No 1120/2006) M/s. New India Assurance Co. Ltd. Delhi Regional Office-II, Scope Minar-I, 10th Floor, Core-I, Laxmi Nagar District Centre-II, Delhi 110092. . . . Appellant Through Mr. Navdeep Singh, Advocate Versus Mr. Suresh Chand Mittal, E/o. 26/21, ShaktiNagar, Delhi 110007. . . . Respondent CORAM: Justice J.D. Kapoor, President Ms. Rumnita Mittal, Member
1. Whether Reporters of local newspapers be allowed to see the judgment?
2. To be referred to the Reporter or not?
Justice J.D. Kapoor (Oral)
1. Vide impugned Order dated 05-10-2007 passed by the District Forum the appellant has been found guilty of deficiency in service for not honouring the mediclaim during currency of the insurance policy and directed to pay Rs. 2,86,184/- with interest @9% per annum w.e.f. 26-10-2006 (the date of institution of complaint) and Rs. 10,000/- as cost of litigation. Feeling aggrieved, the appellant has preferred this appeal.
2. There is no dispute that the respondent took a policy of mediclaim insurance valid for a period of one year from 13-1-2006 to 12-1-2007 which covered him to the extent of Rs. 3.00 Lac with cashless facility from the appellant Insurance Company. The respondent has been insuring himself for eleven years without break. He was admitted to Apollo Hospital on 27-7-2006 where he was treated and discharged on 7-8-2006. When he filed the claim with the appellant, the appellant rejected the claim invoking exclusion clause 4.1 for concealment of a factum of pre-existing disease.
3. Exclusion clause 4.1 reads as under:-
All diseases/injuries which were pre- existing when the cover incepts for the first time.
4. It is contended by the Ld. Counsel for the appellant that the disease Hyperkalemia for which the respondent was treated at the hospital as well as iron deficiency are caused due to chronic kidney disease and chronic kidney disease is a result of diabetes and patient has been suffering from it for the last thirty years and diabetes being a pre-existing disease and this has caused the ailments for which the insured was admitted in hospital and in view of the principle of proximate cause, the claim falls under policy exclusion 4.1 of pre-existing disease referred above.
5. As is apparent, it was not the case of the appellant that the respondent was suffering from the disease for which he was treated prior to obtaining the policy. Its case was that diabetes was pre-existing for the last thirty years which has caused chronic kidney disease and hyperkalemia and iron deficiency.
6. We have deprecated such an approach by the Insurance companies time and again by reminding them that the contract of insurance is a beneficial contract and, therefore, each and every term should be provided a beneficial interpretation. But the mindset of these companies and its officials is as to how to defeat the claim of a consumer, by picking a little reference or flimsy clue from discharge summary to repudiate the claim on concealment of pre-existing disease, which does not augur well either for the business interests of the company or for the consumer-friendly approach of any service provider.
7. It is a very strange case that a person has been getting insurance policies for the last eleven years and his claim has been rejected on the ground that he has been suffering from diabetese for thirty years as if he has lived all his life as a diseased person without attending to the daily ordeals of life or day to day household chores, as the case may be.
8. In one of our judgments, we have discussed in highly dissective and extensive manner as to the concept, dictionary meaning, medical meaning and import of the word disease and pre-existing disease in reference to mediclaim policies, by observing that unless and until a person conceals the factum of his having been hospitalized or undergone an operation in the near proximity of obtaining the policy, say one or two years, he cannot be accused of suppressing relevant information as to the state of his health.
9. If the perception of the Insurance Companies or the appellant is accepted then a person who has suffered a heart attack twenty years back and was thereafter having a very hale and hearty life, his claim is supposed to be rejected on non-disclosure of pre-existing disease, which is far-fetched and preposterous way of dealing with the insurance claim of the insured. Some of the conclusions drawn by us from various medical literatures are as under:-
(i) 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.
(ii) Such a disease should not only be existing at the time of taking the policy but also should have existed in the near proximity.
If the insured had been hospitalized or operated upon for the said disease in the near past, say, six months or a year he is supposed to disclose the said fact to rule out the failure of his claim on the ground of concealment of information as to pre-existing disease.
(iii) Malaise of hypertension, diabetes, occasional pain, cold, headache, arthritis and the like in the body are normal wear and tear of modern day life which is full of tension at the place of work, in and out the house and are controllable on day to day basis by standard medication and cannot be used as concealment of pre-existing disease for repudiation of the insurance claim unless an insured in the near proximity of taking of the policy is hospitalized or operated upon for the treatment of these diseases or any other disease.
(iv) If insured had been even otherwise been living normal and healthy life and attending to his duties and daily chores like any other person and is not declared as a diseased person as referred above he cannot be held guilty for concealment of any disease, the medical terminology of which is even not known to an educated person unless he is hospitalized and operated upon for a particular disease in the near proximity of date of insurance policy say few days or months.
(v) Diseases that can be easily detected by subjecting the insured to basic tests like blood test, ECG etc. the insured is not supposed to disclose such disease because of otherwise leading a normal and healthy life cannot brand such a person a diseased person. Insurance Company cannot take advantage of its own act of omission and commission as it is under obligation to ensure before issuing medi-claim policy whether a person is fit to be insured or not. It appears that insurance Companies dont discharge this obligation as half of the population is suffering from such malaises and they would be left with no or very little business.
(vi) Thus any attempt on the part of the insurer to repudiate the claim for such non-disclosure is not permissible, nor is exclusion clause invokable.
(vii) Claim of any insured should not be and cannot be repudiated by taking a clue or remote reference to any so-called disease from the discharge summary of the insured for invoking the exclusion clause or non-disclosure of pre-existing disease unless the insured had concealed his hospitalization or operation for the said disease undertaken in the reasonable near proximity as referred above.
(viii) Day to day history or history of several years of some or the other physical problems one may face occasionally without having hospitalized or undergone operation for the disease cannot be used for repudiating the claim. For instance, an insured had suffered from a particular disease for which he was hospitalized or operated upon 10 to 20 years ago and since then had been living healthy and normal life cannot be accused of concealment of pre-existing disease while taking mediclaim policy as after being cured of the disease, he does not suffer from any disease much less a pre-existing disease.
(ix) To say that the insured has concealed the fact that he was having pain in the chest off and on for years, but has never been diagnosed or operated upon for heart disease, but suddenly lands up in the hospital for the said purpose and, therefore, is disentitled for claim bares dubious design of the insurer to defeat the rightful claim of the insured on flimsy ground. Instances are not rare where people suffer a massive attack without having even been hospitalized or operated upon for 20 years or so.
(x) Non-disclosure of hospitalization/or operation for disease that too in the reasonable proximity of the date of mediclaim policy is the only ground on which the claim of an insured can be repudiated and on no other ground.
10. In the instant case, the person was admitted for hyperkalemia and to say that this was the result of his suffering from diabetes for thirty years before and, therefore, he is to be denied his claim boggles our mind and stresses our imagination.
11. Now we are reminding all the Insurance Companies by forwarding a copy of this Order to the Chairmen that they should be now ready for direction to deduct the amount of compensation from their salaries for their whimsical, arbitrary and negative approach as, if they start repudiating such claims, they will run out of business as half the population of the country suffers from diabetese, a flimsy clue of which they picked from the discharge summary for rejecting the claim. In this regard, the observations of the Supreme Court and the English Courts, in the case of Ghaziabad Development Authority Vs Balbir Singh-(2004) 5 SCC 65, for deducting the compensation amount from the salary of the concerned functionaries need to be quoted for the benefit of the Insurance Companies which are as under:-
This Court then went on to hold as follows:
10. Who should pay the amount determined by the Commission for harassment and agony, the statutory authority or should it be realised from those who were responsible for it? Compensation as explained includes both the just equivalent for loss of goods or services and also for sufferance of injustice. For instance in Civil Appeal No.... of 1993 arising out of SLP (Civil) No.659 of 1991 the Commission directed the Bangalore Development Authority to pay Rs.2446.00 to the consumer for the expenses incurred by him in getting the lease-cum-sale agreement registered as it was additional expenditure for alternative site allotted to him. No misfeasance was found. The moment the authority came to know of the mistake committed by it, it took immediate action by allotting alternative site to the respondent. It was compensation for exact loss suffered by the respondent.
It arose in due discharge of duties.
For such acts or omissions the loss suffered has to be made good by the authority itself. But when the sufferance is due to mala fide or oppressive or capricious acts etc. of a public servant, then the nature of liability changes.
The Commission under the Act could determine such amount if in its opinion the consumer suffered injury due to what is called misfeasance of the officers by the English Courts. Even in England where award of exemplary or aggravated damages for insult etc. to a person has now been held to be punitive, exception has been carved out if the injury is due to, 'oppressive, arbitrary or unconstitutional action by servants of the Government' (Salmond and Heuston on the Law of Torts).
Misfeasance in public office is explained by Wade in his book on Administrative Law thus:
"Even where there is no ministerial duty as above, and even where no recognised tort such as trespass, nuisance, or negligence is committed, public authorities or officers may be liable in damages for malicious, deliberate or injurious wrong-doing. There is thus a tort which has been called misfeasance in public office, and which includes malicious abuse of power, deliberate maladministration, and perhaps also other unlawful acts causing injury." (p.777).
The jurisdiction and power of the courts to indemnify a citizen for injury suffered due to abuse of power by public authorities is founded as observed by Lord Hailsham in Cassell & Co. Ltd. v. Broome [1972 AC 1027: (1972) 1 All ER 801] on the principle that, 'an award of exemplary damages can serve a useful purpose in vindicating the strength of law'. An ordinary citizen or a common man is hardly equipped to match the might of the State or its instrumentalities. That is provided by the rule of law. It acts as a check on arbitrary and capricious exercise of power.
In Rookes v. Barnard [1964 AC 1129: (1964) 1 All ER 367, 410] it was observed by Lord Devlin, 'the servants of the government are also the servants of the people and the use of their power must always be subordinate to their duty of service'. A public functionary if he acts maliciously or oppressively and the exercise of powers results in harassment and agony then it is not an exercise of power but its abuse.
No law provides protection against it.
He who is responsible for it must suffer it. Compensation or damage as explained earlier may arise even when the officer discharges his duty honestly and bona fide. But when it arises due to arbitrary or capricious behaviour then it loses its individual character and assumes social significance. Harassment of a common man by public authorities is socially abhorring and legally impermissible. It may harm him personally but the injury to society is far more grievous. Crime and corruption thrive and prosper in the society due to lack of public resistance.
Nothing is more damaging than the feeling of helplessness. An ordinary citizen instead of complaining and fighting succumbs to the pressure of undesirable functioning in offices instead of standing against it.
Therefore the award of compensation for harassment by public authorities not only compensates the individual, satisfies him personally but helps in curing social evil. It may result in improving the work culture and help in changing the outlook.
Wade in his book - Administrative Law, has observed that it is to the credit of public authorities that there are simply few reported English decisions on this form of malpractice, namely, misfeasance in public offices which includes malicious use of power, deliberate maladministration and perhaps also other unlawful acts causing injury. One of the reasons for this appears to be development of law which apart, from other factors succeeded in keeping a salutary check on the functioning in the government or semi-government offices by holding the officers personally responsible for their capricious or even ultra vires action resulting in injury or loss to a citizen by awarding damages against them. Various decisions rendered from time to time have been referred to by Wade on Misfeasance by Public Authorities. We shall refer to some of them to demonstrate how necessary it is for our society.
In Ashby v. White (1703) 2 Ld. Raym 938 the House of Lords invoked the principle of ubi jus ibi remedium in favour of an elector who was wrongfully prevented from voting and decreed the claim of damages.
The ratio of this decision has been applied and extended by English Courts in various situations.
In Roncarelli v. Duplessis (1959) 16 DLR 2d 689 the Supreme Court of Canada awarded damages against the Prime Minister of Quebec personally for directing the cancellation of a restaurant-owner's liquor licence solely because the licensee provided bail on many occasions for fellow members of the sect of Jehovah's Witnesses, which was then unpopular with the authorities. It was observed that, 'what could be more malicious than to punish this licensee for having done what he had an absolute right to do in a matter utterly irrelevant to the Alcoholic Liquor Act? Malice in the proper sense is simply acting for a reason and purpose knowingly foreign to the administration, to which was added here the element of intentional punishment by what was virtually vocation outlawry.
In Smith v. East Elloe Rural District Council [1956 AC 736: (1956) 1 All ER 855)] The House of Lords held that an action for damages might proceed against the clerk of a local authority personally on the ground that he had procured the compulsory purchase of the plaintiff's property wrongfully and in bad faith.
In Farrington v. Thompson [1959 UR 286] the Supreme Court of Victoria awarded damages for exercising a power the authorities knew they did not possess. A licensing inspector and a police officer ordered the plaintiff to close his hotel and cease supplying liquor. He obeyed and filed a suit for the resultant loss. The Court observed:
"Now I take it to be perfectly clear, that if a public officer abuses his office, either by an act of omission or commission, and the consequence of that is an injury to an individual, an action may be maintained against such public officer."
In Wood v. Blair [The Times, July 3, 4, 5, 1957 (Hallet J and Court of Appeal] a dairy farmer's manageress contracted typhoid fever and the local authority served notices forbidding him to sell milk, except under certain conditions. These notices were void, and the farmer was awarded damages on the ground that the notices were invalid and that the plaintiff was entitled to damages for misfeasance. This was done even though the finding was that the officers had acted from the best motives.
11. Today the issue thus is not only of award of compensation but who should bear the brunt.
The concept of authority and power exercised by public functionaries has many dimensions. It has undergone tremendous change with passage of time and change in socio-economic outlook. The authority empowered to function under a statute while exercising power discharges public duty. It has to act to subserve general welfare and common good.
In discharging this duty honestly and bana fide, loss may accrue to any person. And he may claim compensation which may in circumstances be payable.
But where the duty is performed capriciously or the exercise of power results in harassment and agony then the responsibility to pay the loss determined should be whose? In a modern society no authority can arrogate to itself the power to act in a manner which is arbitrary. It is unfortunate that matters which require immediate attention linger on and the man in the street is made to run from one end to other with no result. The culture of window clearance appears to be totally dead. Even in ordinary matters a common man who has neither the political backing nor the financial strength to match the inaction in public oriented departments gets frustrated and it erodes the credibility in the system. Public administration, no doubt involves a vast amount of administrative discretion which shields the action of administrative authority. But where it is found that exercise of discretion was mala fide and the complainant is entitled to compensation for mental and physical harassment then the officer can no more claim to be under protective cover. When a citizen seeks to recover compensation from a public authority in respect of injuries suffered by him for capricious exercise of power and the National Commission finds it duly proved then it has a statutory obligation to award the same. It was never more necessary than today when even social obligations are regulated by grant of statutory powers. The test of permissive form of grant is over. It is now imperative and implicit in the exercise of power that it should be for the sake of society. When the Court directs payment of damages or compensation against the State the ultimate sufferer is the common man. It is the tax payers' money which is paid for inaction of those who are entrusted under the Act to discharge their duties in accordance with law.
It is, therefore, necessary that the Commission when it is satisfied that a complainant is entitled to compensation for harassment or mental agony or oppression, which finding of course should be recorded carefully on material and convincing circumstances and not lightly, then it should further direct the department concerned to pay the amount to the complainant from the public fund immediately but to recover the same from those who are found responsible for such unpardonable behaviour by dividing it proportionately where there are more than one functionaries."
We are in full agreement with what is observed herein. Thus the law is that the Consumer Protection Act has a wide reach and the Commission has jurisdiction even in cases of service rendered by statutory and public authorities. Such authorities become liable to compensate for misfeasance in public office i.e. an act which is oppressive or capricious or arbitrary or negligent provided loss or injury is suffered by a citizen.
12. The foregoing reasons persuade us to dismiss the appeal, which is misconceived and misdirected, with a cost of Rs. 25,000/- (Twenty Five Thousand) which shall be deposited in the Consumer Welfare Fund which we have created for providing free legal service to the poor consumers.
Appeal is disposed of in above terms.
Order of the District Forum shall be complied with within one month from the date of receipt of a copy of this order.
13. Copy of orders, as per statutory requirement, be forwarded to the parties and the concerned District Forum and thereafter the file be consigned to record. FDR/Bank Guarantee, if any, be released under proper receipt.
(Justice J.D. Kapoor) President (Rumnita Mittal) Member HK