Mukul Sonawala vs Oriental Insurance Co. Ltd. & Ors

Subhash Chandra, Presiding Member

This complaint is filed under section 12 read with section 14 of the Consumer Protection Act, 1986 (in short, the ‘Act’) alleging deficiency in service and unfair trade practice on part of the opposite parties in respect of the Overseas Travel Insurance issued by the opposite parties no. 1, 2 and 3, The Oriental Insurance Company Ltd, Mumbai to the complainant who availed of a policy for his overseas travel in May - June 2010.

In brief, the facts are that the complainant obtained an Overseas Travel Insurance (No. 121800/48/2010/15534) on payment of a premium from opposite party no.1 through opposite party no. 2, Heritage Health TPA Service Pvt. Ltd, who is the agent of opposite party no.1 for the period 17.05.2010 to 13.06.2010 for a sum of USD 2,50,000. Shortly after arrival in the USA, on 27.05.2010, the complainant fell ill and was admitted to Poudre Valley Hospital, Fort Collins, Colorado, USA. He was diagnosed with fever with malaria and was required to remain admitted in hospital. The expenditure incurred was USD 2,59,000. His claim was repudiated by the opposite party no. 2 on 30.12.2010 on the ground that the cause of hospitalization was a pre-existing illness as per clause 10 (c) of the policy. The complainant contested this ground of repudiation, stating that he would not have travelled overseas if he was unwell and that the report of a medical doctor from the panel of opposite party no.2 prior to issue of the policy had certified him to be medically fit to travel.

The complainant has alleged that the act of repudiation is illegal and amounts to deficiency in service and unfair trade practice. It is his averment that he had been examined by an authorised doctor on behalf of opposite party no. 2 and not diagnosed with a pre-existing illness and that the terms and conditions of the policy were not disclosed to him even though he paid the premium. He avers that as per IRDA Regulations Act and various judgements of the Hon’ble Supreme Court and this Commission he is entitled to compensation of the sum assured along with interest and damages. He is before us with the following prayer:

(a) The opposite party be ordered and directed to pay by an award of this Hon’ble Commission a sum of Rs.2,00,000/- being the compensation for the deficiency of service and unfair trade practices as stated hereinabove.

(b) The opposite party be ordered and directed the amount of US $ 2,59,000/- which comes to Rs.1,19,14,000/- along with interest @ 18% per annum from repudiation of claim till payment as per the provisions of law and the judgment, till payment and restrict our claim upto sum insured;

(c )  The opposite party be ordered and directed to pay a sum of Rs.2,00,000/- for mental torture and harassment;

(d )  The opposite party be ordered and directed to pay a sum of Rs.2,00,000/- being the fees to the advocate and Rs.2,00,000/- for cost and expenses;

(e )  Pending the hearing and final disposal an interim award may be granted; and

(f) Such other and further order as this Hon’ble Court deem fit and proper.

The opposite party no. 1 has resisted the complaint by way of a written statement. By way of preliminary objections, it is contended that the complainant concealed material facts of a previously existing ailment and disease in procuring the insurance policy and the policy is therefore liable to be dismissed as per G Appukuttan Pillai vs Government of India AIR 1970 Ker 110 (112) (FB) and Asiatic Engineering Co. vs Achhru Ram AIR 1951 ALL. 746 (FB). It is not denied that an Overseas Medi-Claim Policy was issued by M/s Tavel Tag for the period 17.05.2010 to 13.06.2010 covering, inter alia, medical expenses, evacuation and repatriation for USD 2,50,000. The insured was hospitalised in the USA on 27.05.2010 for acute respiratory insufficiency and diagnosed with malaria and sepsis and a bill for USD 2,39,991.81 was raised. Heritage Health TPA upon examination of papers from Poudre Hospital, USA observed that the insured had a past history of disease which had not been disclosed in the proposal for the policy. The report of the hospital noted that the insured admitted that there had been an outbreak of malaria in Bombay and prior to his departure, the insured’s son and neighbours had also contacted malaria. An opinion from a Dr Anil M. Ozarde is relied upon which states that as P Vivax malaria incubation period varies from 10 days to 2-4 years, the insured was in carrier stage when he travelled to USA. As per the Mediclaim Policy conditions 10 (b) and (c) no pre-existing conditions are payable and therefore the claim was repudiated under exclusion clause by opposite party no.1. Reliance is placed on the principle of Uberrima Fides (utmost good faith) on which the policy is based in terms of judgements referred to above. It is contended that the policy covers risks/unforeseen circumstances and does not cover pre-existing diseases or complications therefrom.

On merits it is contended that while respondent no.1 received the premium, the policy was issued by Karvat Travel Services Pvt. Ltd. for Trawelltag members as per conditions that can be downloaded from their web site, if required. It is stated that the claim has been repudiated on the basis of case papers and the Doctor’s opinion and not assumption and presumption. Past case history emerged only on the basis of the papers from the hospital in USA and the claim was repudiated by Heritage Health TPA Pvt. Ltd. who are the Third Party Claim Administrators. Deficiency in service and unfair trade practice is denied as no indemnity in respect of medical services is provided under the policy which does not cover pre-existing illnesses.

Parties led their evidence. Complainant filed his rejoinder to the written statement. We have heard the learned counsel for both the parties and given careful consideration to the evidence on record.

Complainant has relied upon the Hon’ble Supreme Court’s judgement in Oriental Insurance Co. Vs. Dharam Chand (2010) 15 SCC 141 that the policy commences from the date of payment of premium. He has alleged deficiency in service as the policy was intended to cover unforeseen medical circumstances for which a prior medical examination was conducted by an authorised doctor and premium collected. No pre-existing illness was detected. He has relied on Modern Insulators Ltd. Vs. Oriental Insurance Co. Ltd. (2000) 2 SCC 734 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.

In view of the above settled position of law we are of the opinion that the view expressed by the National Commission is not correct. As the above terms and conditions of the standard policy wherein the exclusion clause was included, were neither a part of the contract of insurance nor disclosed to the appellant, the respondent cannot claim the benefit of the said exclusion clause. Therefore, the finding of the National Commission is untenable in law.

Complainant’s contention is that the opposite party is also bound by the principle of utmost good faith.

Reliance is also placed on Life Insurance Corporation of India Vs. Shahida Begum 2001 SCC OnLine NCDRC 284 and Bhagani Bai Vs. Life Insurance Corporation AIR 1984 SC 125, which states that:

“the insurer cannot repudiate the liability by showing some inaccuracy or falsity of statement nor can it avoid the liability for immaterial misrepresentation or for material mis-representation which had no bearing on the risk. Similarly mere non-disclosure of some immaterial facts would not per se give right to rescission. In other words, a misrepresentation would not ipso-facto be a ground available to the aggrieved party to avoid the contract unless it is found that consent of opposite party was secured by practicing some deception. Thus on every misrepresentation or concealment of a fact, a contract cannot be avoided merely on trival and inconsequential misstatement or non-disclosure”.

Repudiation of the policy has been done on the ground that the insured suffered from a pre-existing illness as he was a carrier of Malaria infection. This is concluded on the ground that the petitioner’s son and neighbours had contracted malaria before his departure and the opinion of a doctor that P Vivax Malaria incubates for 7-10 days and can remain in the body for 2 to 4 years. However, as on the date of the medical examination by the authorised doctor of the opposite party the complainant was not found to be suffering from malaria. There is no evidence produced by the opposite party to establish this fact. Therefore, it is not clear on what basis the opposite party has concluded that malaria was a pre-existing illness. It is also not the respondent’s case that it is case of false declaration. No test report of the petitioner for malaria revealing a positive result has been produced. The medical examination report and the proposal documents also do not disclose any indication of the pre-existence of malaria. It is only a presumption and assumption that he contacted malaria from his son or neighbours. The reason for repudiation of the claim is therefore, based not on medical evidence but on a surmise which cannot be a valid ground for repudiating the claim.

For the foregoing reasons, we find merit in the complaint and allow the same. The opposite party is directed to pay the complainant USD 2,39,991.81 along with interest at 9% from 30.12.2010 till the date of realization. The order be complied within 2 months failing which the opposite party will be liable to pay interest at 12%.

The complaint is disposed of with these directions.