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Judgment
These revision petitions have been filed by the petitioner, Reliance General Insurance Co. Ltd. in respect of the same mediclaim policy against the order dated 23.12.2010 passed in FA No.1792/2009 and order dated 2.12.2013 passed in FA No.689/2013 by the State Consumer Disputes Redressal Commission, Haryana, Panchkula (in short 'the State Commission'), whereby the State Commission dismissed both the appeals.
Briefly stated, facts relevant for the disposal of these revision petitions are that the respondent no.1/complainant obtained a Reliance Healthwise Policy No. 282520087795 from petitioner i.e. Reliance General Insurance Company Limited through its franchise Smt. Sunita Rani for the period from 07.07.2007 to 06.07.2008 in his name and in the names of his wife Smt. Usha Rani Ahuja and two sons Vikram and Vivek Ahuja. Under the said policy complainant and his family members were insured for Rs. 2 lakhs against any health problem and Rs. 4 lakhs in case of any critical illness. The above said policy was further renewed for the period from 07.07.2008 to 6.7.2009 vide policy no. 282540013094.
It is the case of the complainant that his wife was detected as suffering from ovarian cancer for which firstly she was treated in Sood Hospital, Karnal; then AIIMS, Delhi and lastly at Rajiv Gandhi Cancer Institute and Research Centre, New Delhi from 19.1.2008 onwards. She remained hospitalized from 19.1.2008 to 23.8.2008. During this period she had to undergo laparotomy, several costly diagnostic and pathological tests. As these treatments were costly, claimant raised a claim of Rs.91496 for the expenditure incurred from 19.1.2008 to 11.3.2008 and Rs.4,14,464.76 for the treatment received from 13.3.2008 to 19.9.2008.
The claims of the complainant were repudiated by OP vide letters dated 1.10.2008 and 8.12.2008. The reason given was that the complainant's wife was a known case of Rheumatic heart disease for the last five years and the same was not declared in the proposal form.
Aggrieved, the complainants then filed a consumer complaint in the District Forum against deficiency in service on the part of OPs and prayed for a direction to the OP to pay the above said amounts of Rs.91,496/- and Rs.4,14,464/- along with interest @ 24% p.a. from the date of lodging of the claims till payment alongwith Rs. 1 lakh as compensation on account of harassment and costs towards litigation.
Notice of the complaint was served to OPs. OP 1 appeared and filed its written reply stating that at the time of taking the policy in question the complainant no. 2 never disclosed that she was known case of rheumatic heart disease for the last five years. So as per the terms and conditions of the policy, the policy has become null and void and no claim is payable to her. OP 1 replied that if this fact would have been disclosed earlier at the time of declaration in the proposal form, policy would not have been issued at the first place. OP 2 did not appear so it was proceeded ex parte vide orders dated 21.5.2009 passed by the forum.
District Forum, Karnal vide its order dated 11.09.2009 held the OPs guilty. District Forum was of the view that the subsequent disease of the complainant contacted during the existence of the policy has no nexus with the five year old disease. The complainant had been paying the premium amount for the renewal of the policy in time. So, the refusal by OPs to renew the medi-claim insurance policy to the complainant is arbitrary, illegal and also against the contractual terms. OP was directed to renew the policy of the complainant and further directed to reimburse the complainant the expenditure incurred by her on the treatment as per the terms of the medi-claim policy, within one month from the receipt of copy of this order failing which the amount shall carry interest @ 8% p.a. from the date of the order.
Aggrieved by the said order of the District Forum, the OPs preferred an appeal in the State Commission. The State Commission vide its order dated 23.12.2010 dismissed the appeal of the OPs and upheld the order of the District Forum. The State Commission held that when OPs/appellants renewed the policy from 7.7.2008 to 6.7.2009, certainly they admit that it was not a pre-existing disease though the claim was already pending with them. Therefore, the entire argument of appellants that it was a pre-existing disease, and this fact was concealed cannot be accepted.
Against the order of the State Commission dated 23.12.2010, Petitioner/OP has approached this Commission in Revision Petition No.923 of 2011. The grounds taken by the petitioner in the revision petition are that the state commission erred in holding that the judgment of the District Forum was correct. The fact is that the information provided by Complainant no.2 at the time of purchase of the policy was wrong and since there was material concealment of the facts by the complainant, it vitiates the policy contract. The other ground being that the concealment of the fact was willful and this makes the contract void ab initio. The petitioner has already satisfied the award passed by the District Forum in regard to payment of claim and is only requesting to protect them from renewal of the policy in wake of wrong/incorrect information given at the time of taking the first policy. Hence, the petitioner has prayed for setting aside of the order dated 23.12.2010 passed by the state commission in FA/1792/2009.
By order dated 13.5.2011 passed in RP No.923 of 2011, this commission directed the renewal of the policy but it was ordered that the renewal of the policy will be subject to the decision in RP/923/2011.
RP/1417/2014 has been preferred by the petitioner/OP against the order of State Commission dated 02.12.2013 passed in FA No.689 of 2013 whereby state commission dismissed the appeal of the petitioner and upheld the order of the District Forum as a fresh complaint was filed by the complainant in the District Forum. Lastly the policy was renewed from 07.07.2011 to 06.07.2012. Wife of the complainant died on 28.10.2011. Complainant submitted claims with the OPs for the amount that was spent on the treatment of his wife. In total, amount of Rs. 7,47,638/- was claimed from the OPs. However the claims submitted by the complainant were not settled and the OPs wrote a registered letter to the complainant dated 30.1.2012 that the matter was sub-judice before the National Commission for future claims so the complainant has to wait till the outcome of the RP filed before the National Commission. In the meanwhile, District Forum accepted the complaint vide its order dated 1.8.2013 and ordered the OPs to make the payment of Rs.3,23,486.50/-, Rs.2,31,307.34/-, Rs.1,18,511.50 and Rs.74,332.80 which in total amounted to Rs.7,47, 638.19 to the complainant along with interest @ 9% p.a. from the date of repudiation i.e. from 31.1.2012 till realization and compensation of Rs.20,000 for the harassment caused as well as Rs. 5,000 towards litigation charges. Against this order of the District Forum dated 1.8.2013, OP preferred an appeal before the State Commission. State Commission vide its order dated 2.12.2013 upheld the order of the District Forum on the ground that the policy having been validly renewed, the claim is rightly allowed. Hence the present Revision Petition No.1417 of 2014.
Learned counsel for the petitioner contended that foras below have failed to appreciate that the second complaint was premature and the same could not have been decided without the decision in RP/923/2011 as the renewal of the policy was subject to the decision of this Commission in the said RP. It was further stated that the fora below have erred in giving double benefit to the respondent 1 by awarding interest as well as compensation. Petitioner prays for setting aside of the order dated 02.12.2013 passed by the State Commission.
In respect of the RP No. 923 of 2011, learned counsel for the petitioner argued that claim under the medi-claim policy was not approved by the insurance company due to the fact that the complainant had suppressed the information in respect of pre-existing disease which the wife of the complainant was suffering from. The suppression of material information has vitiated the policy and the policy has already become void. However, the District Forum as well as the State Commission have not considered this point in its correct spirit. The learned counsel referred to the following judgments in support of his arguments:
1). Satwant Kaur Sandhu Vs. New India Assurance Company Ltd., MANU/SC/1164/2009. The gist of the judgment is summarized in the following note:
Case Note:
Mediclaim-Contention of Suppression of material fact-Appreciation of evidence-Chronic diabetes and renal failure-facts not stated in proposed for Form-Regular or haemodialysis-Consideration of -Held-Insured under obligation to make true and full disclosure of information within his knowledge-Mediclaim policy is a contract on utmost faith-Insurer in not liable to pay any amount as suppression of material facts established -Dismissed complaint.
2). This Commission in Amzad Khan Vs. Aviva Life Insurance Company Ltd., MANU/CF/0139/2015 observed as under:
"12. Learned counsel for the petitioner has not denied that Late Smt.Munera Begam suffered from Neurovascular Glaucoma and Anxiety Neurosis. He has argued that it is not material and has no nexus with the cause of death as she has died of a heart attack. Learned counsel for the respondent, on the other hand stated that she had concealed the fact that she did suffer from pre-existing disease at the time of filing of the proposal form and taking insurance policy. The investigator in his report has dealt with this in detail. As per investigation report, Late Munera Begam died on 25.11.2012 due to acute MI secondary to irreversible shock as per MCOD Certificate issued by the doctor. She was suffering from pre-existent condition, Anxiety Neurosis and Neurovascular Glaucoma since 2011 or earlier as per the OPD treatment details obtained from SDM Hospital, Dharwad. As per this report, she had visited the hospital on 22.3.2011 and diagnosed with Neurovascular Glaucoma for which she had been prescribed medication and also advised MRI.
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.
As stated in Pollock and Mulla's Indian Contract and Specific Relief Acts - any fact the knowledge or ignorance of which would materially influence an insurer in making the contract or in estimating the degree and character of risks in fixing the rate of premium is a material fact.'
In this regard, it would be apposite to make a reference to Regulation 2(1)(d) of the Insurance Regulatory and Development Authority (Protection of Policyholders' Interests) Regulations, 2002, which explains the meaning of term "material". The Regulation reads thus:
"2. Definitions.--In these regulations, unless the context otherwise requires,--
(a) xxx xxx xxx
(b) xxx xxx xxx
(c) xxx xxx xxx
(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.
The upshot of the entire discussion is that in a Contract of Insurance, any fact which would influence the mind of a 1 2 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. "
The learned counsel further argued that contract of insurance is also a contract and has to be interpreted in the manner in which the parties have entered into the contract. He referred to the judgment of Hon'ble Supreme Court in United India Insurance Co. Limited Vs. Harchand Rai Chandan Lal, 2004 AIR (SC) 4794, wherein the Hon'ble Apex Court held as under:-
"6. ....The terms of the policy have to be construed as it is and we cannot add or subtract something: Howsoever liberally we may construe the policy but we cannot take liberalism to the extent of substituting the words which are not intended.
...It is settled law that terms of the policy shall govern the contract between the parties, they have to abide by the definition given therein and all those expressions appearing in the policy should be interpreted with reference to the terms of policy and not with reference to the definition given in other laws. It is a matter of contract and in terms of the contract the relation of the parties shall abide and it is presumed that when the parties have entered into a contract of insurance with their eyes wide open, they cannot rely on definition given in other enactment.
Therefore, it is settled law that the terms of the contract has to be strictly read and natural meaning be given to it. No outside aid should be sought unless the meaning is ambiguous."
Learned counsel for the petitioner further pointed out that the petitioner insurance company has already paid the amount awarded by the State Commission vide its order dated 23.12.2010.
The learned counsel for the insurance company further stated that vide Circular No. 52/15/IRDA/Health/SN/0809 dated March 31, 2009, Insurance Regulatory and Development Authority (IRDA) issued guidelines for renewal of mediclaim policy and it has been provided that health insurance policy shall ordinarily be renewable except on grounds such as fraud, moral hazard or misrepresentation and upon renewal being sought by the insured, it shall not be rejected on arbitrary grounds. It was stated that the main question was in respect of renewal of the policy as the District Forum had ordered the renewal of the policy in favour of the complainant. The question of renewal of the policy was the major point in the appeal filed by the insurance company. However, the State Commission has not given any finding on this aspect in the impugned order dated 23.12.2010. During the pendency of the Revision Petition No.923/2011, this Commission vide order dated 13.5.2011 allowed the renewal of the mediclaim policy subject to the decision of this Commission in the revision petition.
The complainant then submitted another claim before the District Forum in Consumer Complaint No.249 of 2012 wherein the petitioner insurance company had taken a stand that the claim cannot be allowed as the renewal was subject to the final decision in RP No.923 of 2011. However, the District Forum and the State Commission both have not accepted this argument and have allowed the claim against which the RP No.1417 of 2014 has been filed. Until the question of renewal is finally decided by this Commission, there should be no question of implementation of the order dated 2.12.2013 passed by the State Commission in FA No. 689 of 2013 which was filed against the order dated 1.8.2013 passed by the District Forum in CC No.249 of 2012. From this point of view, learned counsel argued that clearly the order dated 1.8.2013 passed by the District Forum and order dated 2.12.2013 passed by the State Commission are not maintainable as they have been passed treating the renewal of the policy as final whereas it was subject to final decision in RP No.923 of 2011.
On the other hand, the learned counsel for the respondent no.1 stated that the alleged rheumatic heart disease has no relation with the overian cancer for which the claim was preferred under the mediclaim policy in question. The claim cannot be refuted only on the technical ground that some information was not provided in the proposal form. The fact is that the alleged suppression has nothing to do with the claim filed under the mediclaim policy. To support his arguments, learned counsel referred to the order of this Commission in Mr. J. Bhaskar Joel Vs. The Branch Manager, The New India Assurance Company Ltd., First Appeal No. 327 of 2001 decided on 27.3.2006, wherein it has been observed as under:
"From a perusal of this report, it is clear that the medical board of cardiologists found it difficult to conclude that the mitral valve prolapse which had occurred was secondary to the rheumatic fever from which the patient suffered at the age of 10 years. The petitioner has stated that prior to this disease he did not have any medical problem related to his heart condition and in view of this fact, it cannot be established that the childhood rheumatic fever led subsequently to the Mitral valve prolapse. The onus to proof the facts to the contrary was on the respondent who has failed to do so. Under these circumstances, we feel that the State Commission erred in accepting the appeal. We, therefore, set aside the order of the State Commission and uphold the order of the District Forum."
Learned counsel for the respondent further stated that as the policy was ordered to be renewed vide order dated 13.5.2011 by this Commission, whatever may be the decision in the Revision Petition No.923 of 2011, the policy stood renewed at least for the period as per order dated 13.5.2011. Therefore, the claims submitted through the renewed policy by the respondent are required to be paid by the insurance company. Obviously, this Commission even if finally decides that renewal is not mandatory and the OP is not obliged to renew the policy, the renewal granted by the National Commission vide order dated 13.5.2011 shall still remain valid as renewal once done cannot be made ineffective as rights accrued under the renewal cannot be annulled subsequently.
I have carefully considered the arguments advanced by learned counsel for both the parties and have examined the material on record. Revision Petition No.923 of 2011 has been filed against the order dated 23.12.2010 passed by the State Commission and it has been stated by the learned counsel for the petitioner that petitioner company has already made the payment as ordered by the State Commission to the complainant and the company is only concerned about renewals and for the bills submitted by the complainant subsequently which were allowed by the District Forum and by the State Commission. Moreover, the question of renewal was raised in the appeal filed before the State Commission, however, the State Commission has not given a clear finding on the renewal aspect of the policy. However, in the second complaint filed by the complainant, the District Forum and the State Commission both have allowed the claim on the basis of the renewal of the policy. It is seen that the order for renewal of the policy was passed by this Commission on 13.5.2011 wherein the policy was ordered to be renewed subject to decision of this Commission in RP No.923 of 2011. Therefore, the main issue to be decided by this Commission is about renewal of the policy. It is seen from the policy that the following provision has been mentioned in the policy about renewal:
"20. The company shall not be bound to accept any renewal premium nor give notice that such is due. Every renewal premium which shall be paid and accepted in respect of this policy) shall be so paid and accepted upon the distinct understanding that no alteration has taken place in the acts contained in the proposal or declaration herein before mentioned and that nothing is known to the insured that may result in enhancing the risk of the company. No renewal receipt shall be valid unless it is on the printed form of the company and signed by an authorized official of the company."
Apart from the above, it is seen that the guidelines of Insurance Regulatory & Development Authority (IRDA) issued vide Circular No. 52/15/IRDA/Health/SN/08-09 dated 31st March, 2009 in respect of renewal of medi-claim policy, mention the following:
"That the health insurance policy shall be ordinarily renewable except on grounds such as fraud, moral hazard or misrepresentation and upon renewal being sought by the insured, shall not be rejected on arbitrary grounds."
It is the case of the petitioner that the complainant had misrepresented in respect of the pre-existing disease of rheumatic heart disease of his wife. The complainant has not denied the existence of rheumatic heart disease being suffered by his wife. In fact, in para no.5 of the complaint, the following has been averred:
"The Rheumatic heart disease has nothing to do with the development of cancer in the ovary of complainant no.2 Both the diseases have no nexus whatsoever and there is not even a remotest possibility of the complainant having come to suffer from cancer of the ovary because of the Rheumatic heart disease."
From the above it is clear that the complainant is not denying the existence of that disease, rather, his contention is that the rheumatic heart disease has no connection with the cancer of ovary for which the treatment bills were submitted for payment. Thus, it is clear that there was a misrepresentation in the proposal form as the pre-existing disease of rheumatic heart disease was not disclosed before taking the policy. As per the circular of IRDA dated 31st March, 2009, the renewal can be refused on the ground of fraud, moral hazard or misrepresentation. Thus, in my view, on the basis of misrepresentation and suppression of material fact of pre-existing disease of rheumatic heart disease, the OP is entitled to not to renew the policy.
The order passed by this Commission dated 13.5.2011 was subject to final decision in RP No. 923 of 2011. As now it has been concluded by this Commission that the complainant had misrepresented before the insurance company by not disclosing the pre-existing disease of rheumatic heart disease of his wife, therefore, in the light of the IRDA guidelines as mentioned above, the OP insurance company was entitled to refuse the renewal. Accordingly, the renewal order dated 13.5.2011 passed by this Commission stands vacated as the OP's contention in the RP No. 923 of 2011 has been accepted and the condition with which the order dated 13.5.2011 was passed has not been satisfied. Therefore, the RP No. 923 of 2011 is partly allowed so far as the question of renewal is concerned.
So far as the question of insurance claim allowed by the District Forum and confirmed by the State Commission in the first complaint is concerned, it is seen that the treatment expenditure allowed is in respect of decease of overian cancer whereas the pre-existing disease relates to rheumatic heart disease. The two do not seem to have any "cause of effect" relationship. Hon'ble Supreme Court in Sulbha Prakash Motegaonkar And Ors. Vs. Life Insurance Corporation of India, Civil Appeal No.8245 of 2015, decided on 05.10.2015 (SC), has observed as under:-
"We have heard learned counsel for the parties.
It is not the case of the Insurance Company that the ailment that the deceased was suffering from was a life threatening disease which could or did cause the death of the insured. In fact, the clear case is that the deceased died due to ischaemic heart disease and also because of myocardial infarction. The concealment of lumbar spondylitis with PID with sciatica persuaded the respondent not to grant the insurance claim.
We are of the opinion that National Commission was in error in denying to the appellants the insurance claim and accepting the repudiation of the claim by the respondent. The death of the insured due to ischaemic heart disease and myocardial infarction had nothing to do with this lumbar spondylitis with PID with sciatica. In our considered opinion, since the alleged concealment was not of such a nature as would disentitle the deceased from getting his life insured, the repudiation of the claim was incorrect and not justified."
Otherwise also, the claim that was approved by the District Forum and confirmed by the State Commission was in respect of the policy periods which were accepted by the OP and in fact the OP had renewed the medi-claim policy from 7.7.2008 to 6.7.2009 and the question of suppression of information in respect of the rheumatic heart disease was not a material information as the treatment was in respect of cancer of ovary which did not have any direct connection with the rheumatic heart disease in the light of the decision of the Hon'ble Supreme Court in Sulbha Prakash Motegaonkar And Ors. Vs. Life Insurance Corporation of India (supra).Therefore, I do not find any illegality or material irregularity or jurisdictional error in the order dated 23.12.2010 of the State Commission in so far as it relates to confirming the award of payment of the treatment bills for Rs.5,05,958.76 filed with first complaint which calls for any interference from this Commission. However, in respect of point of renewal, it is seen that the misrepresentation or non-disclosure of the information in respect of the rheumatic heart disease of his wife, clearly allows the OP not to renew the policy further as per the guidelines issued by IRDA vide Circular No. 52/15/IRDA/Health/SN/08-09 dated 31st March, 2009 and therefore this part of the revision petition is allowed and accordingly the RP No. 923 of 2011 stands allowed so far as the order of renewal granted by the District Forum and confirmed by the State Commission is concerned.
Based on the above discussion, it is clear that the renewal beyond 6.7.2009 was not proper and therefore, I find merit in the RP No.1477/2014 and the same is allowed. The order dated 2.12.2013 of the State Commission and the order dated 1.8.2013 of the District Forum are set aside and complaint is dismissed.