Life Insurance Corporation of India V/S Manish Gupta

IN THE CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.3944 OF 2019 SLP(C) No.5001 2019 LIFE INSURANCE CORPORATION OF INDIA VERSUS JUDGMENT Dr Dhananjaya Y Chandrachud J The District Consumer Disputes Redressal Forum Ambala1 allowed a consumer complaint instituted by the respondent on the basis of a mediclaim policy. The District Forum directed the appellant to pay a sum of Rs 2 21 990 together with interest at the rate of 9% per annum from 29 October 2009 which is the date on which the claim was repudiated. Compensation of Rs 10 000 was awarded towards mental harassment and Rs 10 000 towards litigation expenses. Failing payment within the stipulated period the amount awarded was directed to carry interest at 12% per annum. This order of the District Forum was affirmed in appeal by the State Consumer Disputes Redressal Commission2. The National Consumer Disputes Redressal Commission3 dismissed a 1 “District Forum” revision filed by the appellant. This has given rise to the present appeal The respondent obtained a Mediclaim policy from the appellant. On 7 June 2008 he had submitted a proposal form for a Health Plus policy. The policy was issued on 25 June 2008 under the category of ‘Non Medical General4 for a sum of Rs 1 60 000. The proposal form required a disclosure of health details and medical information Among them was whether the proposer had suffered from “cardiovascular disease e.g.: Palpitations heart attack stroke chest pain”. The proposal form contained a response in the negative to the above query. The Third Party Administrator received a hospital claim form on 7 August 2009 submitted by the respondent which was certified by a doctor at Fortis Hospital Mohali on 4 August 2009 during which period he had undergone a Mitral Valve Replacement5 surgery. The claim was repudiated by the appellant on 29 October 2009 on the ground that the respondent was suffering from a pre existing illness. The expression “pre existing condition” is defined in the exclusions under the policy in the following terms “ii. “Pre existing condition” any medical condition or any related condition of para E of the proposal form. These are: palpitations heart attack stroke and chest pain. These are only illustrations Significantly the declaration by the proposer is in the following terms “I Munish Gupta hereby declare that I have read the proposal form fully and the same was interpreted to me by the agent and also declare that I have understood the nature of the questions and the importance of disclosing all material information while answering such questions. I hereby declare that the foregoing statements and answers to all questions including those in the annexures signed by me have been given by me after fully understanding the questions and the same are true and complete in every particular and that I have not withheld any information and I do hereby agree and declare that these statements and this declaration shall be the basis of the contract of assurance between me and the Life Insurance Corporation and that if any untrue averment be contained therein the said contract shall be absolutely null and void and all monies which shall have been paid in respect thereof shall stand forfeited to the Moreover non disclosure of any health event is specifically set out as a ground for excluding the liability of the insurer. The terms of the policy If any of the Insured or the Claimant shall make or advance any claim knowing the same to be false or fraudulent as regards amount or otherwise this Policy shall immediately become void and all claims or payments in respect of all the insured under this Policy shall be forfeited Non disclosure of any health event or ailment condition sickness Surgery which occurred prior to the taking of this Policy whether such condition is relevant or not to the ailment disease Surgery for which the Insured is admitted treated shall also constitute Fraud.” The declaration which was furnished by the proposer constituted the basis for the issuance of the policy This was particularly so in a case such as the present where no medical examination has been held for a policy under the NMG category The discharge card of the Department of Cardiovascular and Thoracic Surgery at Fortis Hospital specifically contains a resume of the history of the patient and reads thus “Resume of History H O Presenting complaints PATIENT PRESENTED WITH ONE EPISODE OF COUGH ASSOCIATED WITH FEVER 1 MONTH BACK AFTER WHICH HE STARTED TO HAVE PAIN IN HIS JOINTS ASSOC WITH MUSCLE SPASMS. PATIENT ALSO HAD SYNCOPAL EPISODES SINCE LAST SIX MONTHS Past History: K C O RHEUMATIC HEART DISEASE SINCE The past history has been adverted to as a “known case of rheumatic heart disease since childhood”. Apart from the fact that this information would be recorded on the basis of information divulged by the patient this aspect of the recording of the past history by Fortis Hospital was never in dispute. The treatment record indicates that the respondent was operated for MVR. The nature of the diagnosis has been reflected as rheumatic heart disease. The hospital treatment form is along the same lines. A contract of insurance involves utmost good faith In Satwant Kaur Sandhu Vs. New India Assurance Company 6 this Court has held thus “...Thus it needs little emphasis that when an information on a specific aspect is asked for in the proposal form an assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge. It is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not. Of course obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known. The obligation to disclose necessarily depends upon the knowledge one possesses. His opinion of the materiality of that knowledge is of no moment.” The consumer fora have made a fundamental error in allowing the claim for reimbursement of medical expenses in the face of the uncontroverted material on record The documentary material indicates that there was a clear failure on the part of the respondent to disclose that he had suffered from rheumatic heart disease since childhood. The ground for repudiation was in terms of the exclusions contained in the policy. The failure of the insured to disclose the past history of cardiovascular disease was a valid ground for We accordingly allow the appeal and set aside the impugned judgment and order dated 10 December 2018 of the 68 SCC 316 NCDRC. The complaint filed by the respondent shall stand dismissed. There shall be no order as to costs APRIL 15 2019 No.5001 2019 LIFE INSURANCE CORPORATION OF INDIA VERSUS Date : 15 04 2019 This appeal was called on for hearing today CORAM : HON BLE DR. JUSTICE D.Y. CHANDRACHUD HON BLE MR. JUSTICE HEMANT GUPTA Mr. Ashok Panigrahi AOR Mr. Anmol Tayal Adv Mr. vinay Ratnakar Adv Respondent in person UPON hearing the counsel the Court made the following O R D E R The Appeal is allowed in terms of the signed reportable judgment. No costs Pending application if any stands disposed of AR CUM PS COURT MASTER SAROJ KUMARI GAUR Signed reportable judgment is placed on the file

Summary: “A contract of insurance involves utmost good faith” The case took shape when the respondent obtained a Mediclaim policy from the appellant. On 7 June 2008, he had submitted a proposal form for a Health Plus policy. The policy was issued on 25 June 2008 under the category of ‘Non-Medical General for a sum of Rs 1,60,000.  The proposal form required a disclosure of health details and medical information. Among them was whether the proposer had suffered from “cardiovascular disease e.g.: Palpitations, heart attack, stroke, chest pain”. The response to the aforesaid question in the negative. The Third Party Administrator received a hospital claim form on 7 August 2009, submitted by the respondent, which was certified by a doctor at Fortis Hospital, Mohali on 4 August 2009, during which period he had undergone a Mitral Valve Replacement surgery. The claim was repudiated by the appellant on 29 October 2009 on the ground that the respondent was suffering from a pre- existing illness. The District Forum held in favour of the respondent. The District Forum directed the appellant to pay a sum of Rs 2,21,990, together with interest at the rate of 9% per annum from 29 October 2009, which is the date on which the claim was repudiated. The NCDRC, standing by the order of the SCDRC held that though the treating doctor had recorded, under the column of ‘past history’, that this was a known case of rheumatic heart disease since childhood, the doctor had not been examined in order to prove how the information had been recorded in his report.Aggrieved by the above, the present appeal has been filed.ISSUE BEFORE THE COURT:Whether the decision as held by the NCDRC was justified or not? Whether the proposer had suffered or was suffering from cardiovascular disease?RATIO OF THE COURT:The Learned counsel of the appellant stated that the Health-plus policy falls in the NMG category where the insured is not subjected to a medical examination before the issuance of the policy. Hence, it is a solemn obligation of the proposer to truthfully fill out the details required by the insurer in the proposal form on the basis of which the insurer takes a decision in regard to the issuance of the policy.In the present case, it had been submitted that, there was a breach on the part of the insured in giving out the exact information pertaining to the fact that he had been suffering from rheumatic heart disease since childhood. Hence, on this ground, the repudiation was sought to be justified.On the other hand, the respondent, who appeared in person, submitted that while the information which had been recorded by the doctor in the column titled ‘past history’ was based on the disclosure made by the patient, he had merely informed the doctor that he was suffering from fever and joint pains since childhood. The respondent submitted that apart from this, he was not suffering from any other ailment and, hence, he cannot be held liable for any non-disclosure of information on his behalf.The court analysed the purview of the expression “pre-existing condition” and then refer to the past medical history of the respondent. Further, analysing the term “Fraud”, the court opined, that non-disclosure of any health event or ailment/condition/sickness/Surgery which occurred prior to the taking of this Policy, whether such condition is relevant or not to the ailment/disease/Surgery for which the Insured is admitted/treated, shall also constitute Fraud. And, in the present case no medical examination has been held, for a policy under the NMG category.The court referred to the discharge card of the Department of Cardiovascular and Thoracic Surgery at Fortis Hospital and found that the past history has been pointed out as a “known case of rheumatic heart disease since childhood”. The treatment record indicates that the respondent was operated for MVR. and the nature of the diagnosis has been reflected as rheumatic heart disease. The hospital treatment form is along the same lines. The court referred to Satwant Kaur Sandhu Vs. New India Assurance Company Ltd[1], wherein it was held that the obligation to disclose information necessarily depends upon the knowledge one possesses. His opinion of the materiality of that knowledge is of no moment. Therefore, A contract of insurance involves utmost good faith.Therefore, the court opined that the respondent had a clear understanding of his preexisting condition and as per the above case, mentioned case he had the knowledge and thus, should have disclosed proper facts. Based on the aforesaid facts ands circumstances and the analysis of the same, the court held that the documentary material indicates that there was a clear failure on the part of the respondent to disclose that he had suffered from rheumatic heart disease since childhood.DECISION HELD BY COURT:In this case the judgement was given by JUSTICE DR. DHANANJAYA Y CHANDRACHUD that based on the facts and circumstances, the present court had set aside the impugned judgment and order dated 10 December 2018 of the NCDRC.The complaint filed by the respondent was thus, dismissed.There was no order for costs.