Case: MANMOHAN NANDA Vs. UNITED INDIA ASSURANCE CO. LTD. &amp; ANR

2. The facts in a nutshell are that the appellant had sought an to attend the wedding of his sister-in-laws daughter. The appellant was medically examined at the instance of respondent No. 1 insurance company prior to the consideration of his request for issuance of a mediclaim policy. On his medical examination, the report categorically noted that the appellant had diabetes-type II (also known as diabetes mellitus). No other adverse medical condition was found.3. In the medical exam report, a specific query was sought as to whether any abnormalities were observed in the electrocardiogram test of the appellant. There was another query regarding any possible illness or disease for which the appellant may require medical treatment in the ensuing trip to the USA. To both these queries, Dr. Jitendra Jain, the doctor who examined the appellant had answered normal and no respectively. The representative of the respondent insurer on receipt of the medical reports assured the appellant that on verification of the same the policy would be issued.4. The insurer thereafter accepted the proposal form and issued the Overseas Mediclaim Business and Holiday Policy bearing Policy Number 190100/46/09/ 44/70000008 valid from 19th May, 2009 to 1st June, 2009, to the appellant. Thereafter, the appellant boarded a flight to San Francisco, USA on 19th May, 2009 at around 1:00 a.m. from Delhi airport and reached San Francisco on the same day at around 2:00 p.m. (local time). On exiting the customs section at San Francisco airport, appellant felt weak and started sweating. His wife got him admitted at the SFO Medical Centre at San Francisco airport and after he received initial medical treatment, he was shifted to the Mills Peninsula Medical Centre (hereinafter referred to as Medical Centre for the sake of brevity) where angioplasty was performed on the appellant on 19th May, 2009 and 22nd May and three stents were inserted to remove the blockage from the heart vessels.5. In order to avail the benefit under the mediclaim policy, appellants son-in-law contacted M/s Corris International, a foreign collaborator of respondent No. 1 and 2, which was to provide emergency assistance and claims administration services to the insured. M/s Corris International sought certain documents regarding details of treatment given by the Medical Centre as well as details of the mediclaim policy for the purpose of considering the same for indemnifying the appellant. The appellant was discharged on 24th May, 2009.6. Two and a half months thereafter, appellant started receiving bills from the cardio vascular wing of the Medical Centre and SFO Medical Centre towards the treatment he received at their facility. On 19th August, 2009, the appellant sent a letter annexing all bills in original as well as the discharge summary to the Divisional Manager of respondent No. 1 at their Bhopal office. The same letter was also sent to respondent No. 2.7. On 22nd August, 2009, appellant received a letter from respondent No. 2 stating that his claim had been repudiated as the appellant had a history of hyperlipidaemia and diabetes and the policy did not cover per-existing conditions and complications arising therefrom. The said repudiation was with regard to Bill No.1 i.e. the bill raised by the Medical Centre for USD 2,29,719. The appellant protested against the repudiation and requested his claim to be settled on a priority basis as the Medical Centre and the other centre in the USA where he had taken treatment had started pressing for release of payment. In this regard a representation was sent on 16th November, 2009. However, by its letter dated 9th April, 2010, respondent No.1 reiterated its repudiation of the claim made by the appellant.8. Being aggrieved, the appellant filed a complaint under Section 21 (9) of the Consumer Protection Act, 1986 (hereinafter referred to as Act for brevity) against the respondents, being Consumer Complaint No.92/2010 before the Commission. A reply was filed to the complaint by respondent No.1 stating that appellants claim was rightly rejected by respondent No.2 on the ground of non-disclosure of a pre-existing disease as the treatment report of the appellant showed prior medication such as statins, which is a lipid lowering medicine. The said reply was filed on 3rd March, 2011. Respondent No.2 also filed its reply on 27th April, 2011. Appellant filed his rejoinder to the replies of the respondents in August, 2011. Appellant also filed an additional affidavit enclosing medical opinions of three doctors on affidavit stating that prescription of statins to a person having diabetes-type II is by way of precaution and not because the patient would be suffering from any cardiovascular disease. Respondent No. 1 and 2 filed their evidence by way of affidavit and thereafter written submissions were filed by both sides. Subsequently, the Commission dismissed the complaint filed by the appellant on the ground of non-disclosure of material facts. Hence this appeal by the claimant.

Court's reasoning:
28. The fact that a policy namely, Overseas Mediclaim Policy-B, was issued by the respondent insurance company to the appellant is not in dispute. The appellant intended to travel to USA to attend his sister-in-laws daughters wedding which was to take place in May, 2009. Consequently, the appellant sought an overseas mediclaim policy. Dr. Jitendra Jain, the doctor who examined the appellant prior to issuance of the policy noted as per Annexure A-2 that the appellant had diabetes mellitus-II (DM-2) which was controlled on drugs. There was no mention of any past history of any disease, operation, accident, investigation etc. An electrocardiogram test (ECG) was taken and the doctor noted the same as normal. The doctor further noted that there was no current illness or disease which would possibly require medical treatment during the proposers (appellants) forthcoming trip. The doctor did not recommend any stress test. It was also found that in the blood and urine tests of the appellant there was no trace of sugar. The serum glucose/fasting test result showed 92%,which was well within the normal values i.e.between 70-110 mgs %. The urine examination also did not reveal any abnormality. Thereafter the appellant was requested to fill up the proposal form.a) In General Assurance Society Ltd., v. Chandmull Jain AIR 1966 SC 1644 , it was held that where there is an ambiguity in the contract of insurance or doubt, it has to be construed contra proferentem against the Insurance Company.e) In United India Insurance Co. Ltd. v. Orient Treasures (P) (2016) 3 SCC 49  this Court quoted Halsburys laws of England (5th Ed. Vol. 60, Para 105) on the Contra Proferentem rule as under :Contra proferentem rule.-Where there is ambiguity in the policy the court will apply the contra proferentem rule. Where a policy is produced by the insurers, it is their business to see that precision and clarity are attained and, if they fail to do so, the ambiguity will be resolved by adopting the construction favourable to the insured. Similarly, as regards language which emanates from the insured, such as the language used in answer to questions in the proposal or in a slip, a construction favourable to the insurers will prevail if the insured has created any ambiguity. This rule, however, only becomes operative where the words are truly ambiguous; it is a Rule for resolving ambiguity and it cannot be invoked with a view to creating a doubt. Therefore, where the words used are free from ambiguity in the sense that, fairly and reasonably construed, they admit of only one meaning, the Rule has no application.f) Learned counsel for the appellant have relied upon Sushilaben Indravadan Gandhi and Ors. v. The New India Assurance Co. Ltd. and Ors. (2021) 7 SCC 151  wherein it was observed that any exemption of liability clause in an insurance contract must be construed, in case of ambiguity, contra proferentem against the insurer. In the said case reliance was placed on Export Credit Guarantee Society v. Garg Sons International (2014) 1 SCC 686  wherein this court held as under:The insured cannot claim anything more than what is covered by the insurance policy. The terms of the contract have to be construed strictly, without altering the nature of the contract as the same may affect the interests of the parties adversely. The clauses of an insurance policy have to be read as they are. Consequently, the terms of the insurance policy, that fix the responsibility of the insurance company must also be read strictly. The contract must be read as a whole and every attempt should be made to harmonise the terms thereof, keeping in mind that the Rule of contra proferentem does not apply in case of commercial contract, for the reason that a Clause in a commercial contract is bilateral and has mutually been agreed upon.46. Delving on the facts of the case and on consideration of IMT-5 and IMT-16 of the comprehensive private car (B) policy with regard to the limitation of liability clause, it was observed that the contra proferentem rule applies in case of real ambiguity and if on a reading of the whole policy the meaning of the clauses of a contract are clear there is no room for the application of the doctrine. On the facts of the said case, the appeal was allowed by holding that the insurance company was liable to pay the entire amount claimed. The said case arose from an appeal against the order of the High Court of Gujarat wherein the Court had directed that the liability of the insurer shall be limited to a sum of Rs. 25,000/- and the remaining claim amount shall be payable by the employer (hospital) of the deceased. Ambiguity arising with regard to the interpretation of the term employee as appearing in the limitation of liability clause in the insurance contract was construed contra proferentem against the insurance company by holding that the deceased was not an employee of the hospital and that therefore, the entire liability would lie upon the insurer. This Court, therefore, required the insurer therein to pay the entire claim amount to the wife of the deceased.49. The aforesaid principles could be applied to the present case having regard to the nature of the policy in question i.e. a mediclaim policy, the specific queries in the proposal form and the answers thereto given by theappellant in the context of the general and specific clauses therein.(b) In LIC of India v. Smt. G.M. Channabasemma (1991) 1 SCC 357,  it was observed that there is an obligation upon the assured to disclose all materialh may be relevant to the insurer but after issuing a policy, the burden of proving that the insured had made false representations and suppressed material facts is on the insurer. In the said case, it was held that the physicians statement did not lead to a conclusion that the respondent therein was influenced by a serious disease for a long time. On consideration of the evidence led by the parties therein, it was observed that the insurer had failed to prove that the insured was suffering from diabetes or tuberculosis at the time of filling up the proposals for the policies or that he had given any false answer in his statements or suppressed any material fact which he was under a duty to disclose. The finding of the Trial Court that the assured had committed fraud on the insurer while taking out the policies was reversed and the appeal was allowed.d) Hari Om Agarwal v. Oriental Insurance Co. 2007 (98) DRJ 246, is a decision on a mediclaim policy. In the said case, it was held that the insured had suffered from diabetes as well as hypertension at the time of submission of the proposal. The insured was advised to undergo ECG which he did. Thereafter, the proposal was accepted and the cover note was issued. Clause 4.1 of the policy therein came up for interpretation. It was observed that hypertension and diabetes could lead to a host of ailments such as stroke, cardiac disease, renal failure, liver disorder, depending upon various factors. Such ailments can equally arise in non-diabetics and those without hypertension. Giving a contextual interpretation to clause 4.1 of the policy, it was observed that such an interpretation was necessary to avoid rendering a medical cover meaningless. Hence the main purpose rule was pressed into service by holding that clause 4.1 of the said policy could not be used to override the primary liability of the insurer.51. We have also considered the following judgments :c) In Branch Manager Bajaj Allianz Life Insurance Co. v. Dalbir Kaur AIR 2020 SC 5210 , a proposal form was submitted to the appellant therein for a life insurance policy containing questions pertaining to the health and medical history of the proposer and required a specific disclosure as to whether the proposer had undergone any treatment. The proposer answered the queries in the negative. Further a query regarding specific diseases or disorders suffered was also responded to in the negative. A policy of insurance was issued by the insurer on 12th August, 2014, insuring the life of the proposer for a sum of Rs. 8.50 lakhs payable on maturity with the death benefit of Rs. 17 lakhs. On 12th September, 2014, the insured, Kulwant Singh, died giving rise to a claim under the policy. The claim was subjected to an independent investigation and the records revealed that the deceased had been suffering from hepatitis C. The claim was repudiated giving rise to a consumer complaint which was allowed by the District Forum. The appeal before the State Forum was also dismissed, so also by the National Commission, the revision was dismissed. Being aggrieved the insurance company had preferred an appeal before this Court. It was held that the investigation conducted by the insurer in the said case clearly indicated that the deceased was suffering from a pre-existing medical condition which was not disclosed to the insurer despite specific queries relating to any ailment, hospitalisation or treatment undergone by the proposer in column 22 of the proposal form therein. Hence the judgment of the Commission was set aside but since the claim amount was paid to the respondent, exercising jurisdiction under Article 142 of the Constitution it was directed that no recoveries be made by the respondent insurer therein.In the aforesaid judgment, this Court distinguished Sulbha Prakash Motegaonkar and Ors. v. Life Insurance Corporation of India,l No. 8245/2015 decided on 5th October, 2015, by holding that in the said case the assured therein suffered myocardial infraction and succumbed to it. The claim was repudiated by the insurance company on the ground that there was a suppression of a pre- existing lumbar spondylitis. It was in this background that this Court held that the alleged concealment was of such a nature that would not dis-entitle the deceased from getting his life insured. In other words, the pre-existing ailment was clearly unrelated to the cause of death.52. On a consideration of the aforesaid judgments, the following principles would emerge:(i) There is a duty or obligation of disclosure by the insured regarding any material fact at the time of making the proposal. What constitutes a material fact would depend upon the nature of the insurance policy to be taken, the risk to be covered, as well as the queries that are raised in the proposal form.(ii) What may be a material fact in a case would also depend upon the health and medical condition of the proposer.(iii) If specific queries are made in a proposal form then it is expected that specific answers are given by the insured who is bound by the duty to disclose all material facts.(iv) If any query or column in a proposal form is left blank then the insurance company must ask the insured to fill it up. If in spite of any column being left blank, the insurance company accepts the premium and issues a policy, it cannot at a later stage, when a claim is made under the policy, say that there was a suppression or non-disclosure of a material fact, and seek to repudiate the claim.(v) The insurance company has the right to seek details regarding medical condition, if any, of the proposer by getting the proposer examined by one of its empanelled doctors. If, on the consideration of the medical report, the insurance company is satisfied about the medical condition of the proposer and that there is no risk of pre-existing illness, and on such satisfaction it has issued the policy, it cannot thereafter, contend that there was a possible pre-existing illness or sickness which has led to the claim being made by the insured and for that reason repudiate the claim.(vi) The insurer must be able to assess the likely risks that may arise from the status of health and existing disease, if any, disclosed by the insured in the proposal form before issuing the insurance policy. Once the policy has been issued after assessing the medical condition of the insured, the insurer cannot repudiate the claim by citing an existing medical condition which was disclosed by the insured in the proposal form, which condition has led to a particular risk in respect of which the claim has been made by the insured.(vii) In other words, a prudent insurer has to gauge the possible risk that the policy would have to cover and accordingly decide to either accept the proposal form and issue a policy or decline to do so. Such an exercise is dependant on the queries made in the proposal form and the answer to the said queries given by the proposer.59. On a contextual and conjoint reading of the aforesaid queries it is evident that the object of seeking answers from a proposer to the aforesaid queries was, as a prudent insurer to discern whether the proposer had any pre-existing condition for which he had taken medical advice or medical treatment in the 12 months preceding the commencement of travel. Any disclosure of an illness or disease suffered/diagnosed in 12 months preceding the commencement of travel would indicate a pre-existing condition which fact may lead a prudent insurer not to provide an indemnity in respect of medical services, the need for which may arise during the term of the mediclaim policy or lead the insurer to reduce the scope and coverage of risk under the policy.60. In the instant case, since the appellant herein answered query no. 1 in the affirmative and query no. 4 and 5 in the negative it implies that he did not suffer from any illness or disease up to the date of making his proposal apart from what had been disclosed by him, namely diabetes mellitus-II. The respondent insurer being appraised about the said medical condition of the appellant, issued policy to the appellant herein. The respondent insurer did not consider the said medical condition of the appellant as a risk factor for any possible cardiac ailment during the term of the policy so as to decline acceptance of the proposal form and issuance of the mediclaim policy. Also, report of the ECG was considered by one of the panel doctors of respondent-insurer and having found the same to be normal, the policy was issued to the appellant.64. We find considerable force in the argument made on behalf of the appellant. This is because while diabetes mellitus-II is a risk factor for a cardiac ailment in a person, it is not a hard and fast rule that every person having diabetes mellitus-II would necessarily suffer from a cardiac disease. Conversely, a person who does not suffer from diabetes mellitus-II can also suffer from a cardiac ailment. Thus, what the appellant had knowledge of was the existence of diabetes mellitus- II, for which he was under treatment. In order to disclose the status of the said disease he had submitted his ECG report, blood and urine test reports which showed normal results. The fact that ECG report showed normal parameters would indicate that the appellant had no cardiac disease. The prescription of statins to the appellant was only as a precaution to prevent a possible cardiac ailment from developing in the future as diabetes mellitus-II is a risk factor for such a disease. But by that, it cannot be deduced or inferred that because the appellant had a cardiac ailment or hyperlipidaemia, he was prescribed statins.66. Viewed in the aforesaid perspective, it is held that the respondent insurance company could not have repudiated the policy on the ground that acute myocardial infraction suffered by the appellant on landing at San Francisco, USA was a pre-existing and related complication which was excluded under the policy. The insurer was informed about the pre-existing condition of the appellant, namely, diabetes mallitus-II and it was for insurer to gauge a related complication under the policy as a prudent insurer and then issue the policy when satisfied. In the absence of the same, the treatment availed by the appellant for acute myocardial infraction in USA could not have been termed as a direct offshoot of hyperlipidaemia and diabetes mellitus so as to be labelled as a pre- existing disease or illness which the appellant suffered from and had not disclosed the same. At any rate, the appellant had in the proposal form disclosed that he was suffering from diabetes mellitus-II and for which the medical test reports were submitted along with the proposal form which were considered by the insurance company before the policy was issued to the appellant. In fact, the appellant stated in his representation dated 16th November, 2009, against the repudiation of the policy that he was taking lipid-lowering medicines not because he was suffering from hyperlipidaemia but as it was customary to take such medication for prevention of cardio-vascular complications in diabetics. He also stated that he had informed the physician, Dr. Jitendra Jain, who examined him prior to obtaining the policy, of the medicines he had been taking. Therefore, the insurance company was well aware of the fact that the insured was a diabetic and was taking all necessary medication for preventing further complications and controlling the disease. Hence in our view, there was no suppression of any material fact by the appellant to the insurer.67. Further on the disclosures made by the appellant with regard to his existing disease, namely diabetes mellitus-II, the insurance company considered the same and issued the policy in question to the appellant. The respondent insurance company as a prudent insurer considered the details given by the appellant in the proposal form and issued the policy. The insurance company did not think that the medical and health condition of the appellant was such which did not warrant issuance of a mediclaim policy. The insurance company therefore did not decline the proposal of the assured as a prudent insurer.68. Therefore, the respondents were not right in stating that as per the terms and conditions of the policy all the complications arising out of pre-existing condition is not payable. As already noted, acute myocardial infraction can occur in a person who has no history of diabetes mellitus-II. One of the risk factors for the aforesaid cardiac episode is diabetes mellitus-II. The fact that the appellant had diabetes mellitus-II was made known to the insurance company. Therefore, it is observed that any complication which would arise from diabetes mellitus-II was also within the consideration of the insurer. Despite the aforesaid facts regarding the medical record of the insured, the insurance company decided to issue the policy to the appellant. The aforesaid clause has to be read against the respondent insurer by applying the contra proferentem rule against it. Otherwise, the very contract of insurance would become meaningless in the instant case. Hence, in our considered view, the respondent-insurance company was not right in repudiating the policy in question.69. The object of seeking a mediclaim policy is to seek indemnification in respect of a sudden illness or sickness which is not expected or imminent and which may occur overseas. If the insured suffers a sudden sickness or ailment which is not expressly excluded under the policy, a duty is cast on the insurer to indemnify the appellant for the expenses incurred thereunder.70. Hence in the instant case, the repudiation of the policy by the respondent insurance company was illegal and not in accordance with law. Consequently, the appellant is entitled to be indemnified under the policy. In view of the aforesaid discussion, we hold that the Commission was not right in dismissing the complaint filed by the appellant herein.