New India Assurance Co. Ltd. vs ASHRAF BEE PATEL

THIS appeal under Section 15 of the Consumer Protection Act, 1986 (for short the ''Act'') is directed against the order dated 13.2.2001 passed by the District Forum, Dhar in original Case No. 74/2000 directing the appellant-Insurance Company to pay to the respondent-complainant Rs. 75,000/- towards her medical claim.

THE respondent a woman aged about 30 years had on 25.8.1999 taken out a mediclaim insurance policy (No. 48/02542) from the New India Assurance Company Limited, the appellant herein. THE policy was valid up to 24.8.2000 and the amount assured was Rs. 75,000/-. It is also no more in dispute that the respondent-complainant was hospitalized at Bombay Hospital, Mumbai from 8.12.1999 to 22.12.1999 and was also required to undergo brain surgery for Trigeminal Nerve Schwannoma, a kind of brain tumour. She was again hospitalized in Gokuldas Hospital, Indore on 19.1.2001. She lodged a claim for Rs. 75,000/- with the appellant-Insurance Company towards her treatment charges which were in fact much more than the amount covered by the policy. THE appellant got the claim investigated by its Surveyor and ultimately repudiated the claim on the ground that the disease for which the complainant had to take the treatment was pre-existing on the date of drawing of the policy and that it was well within the knowledge of the complainant, who however suppressed the same while submitting the proposal for insurance. This led to filing of the complaint by the respondent before the District Forum, Dhar which allowed the complaint directing the appellant-insurer to pay the amount of insurance Rs. 75,000/- with interest at the rate of 12 per cent per annum and costs of Rs. 500/-. THE Insurance Company is now before this Commission in appeal. We have heard Mr. Rakesh Shrouti, learned Counsel for the appellant and Mr. Kunal Thakre, learned Counsel for the respondent. The only question requiring determination in this appeal is whether the respondent-insured was guilty of non-disclosure of pre-existing disease and if so whether the appellant-insurer was justified in repudiating the claim of the respondent.

As already stated the respondent had to undergo treatment including surgery for the said disease viz., Trigeminal Nerve Schwannoma, at Bombay Hospital, Mumbai from 8.12.1999 to 22.12.1999 and then again at Gokuldas Hospital, Indore on 19.1.2001. The total expenses according to the complainant incurred by her were to the tune of Rs. 2,46,000/- plus Rs. 25,000/- towards to and fro fare for Indore and Mumbai. This amount was much more than the amount assured under the policy. The period during which the respondent was hospitalized was also covered by the term of the policy. The only ground on which the appellant-insurer repudiated the claim of the respondent-insured was that it was a case of pre-existing disease which the respondent knew but did not disclose at the time of taking out the policy. She was, therefore, guilty of violating the exclusion clauses contained in the prospectus prescribing general terms and conditions attached to mediclaim insurance policy.

MR. Rakesh Shrouti, learned Counsel for the appellant took us through the various documents pertaining to the treatment of the respondent particularly the discharge certificate issued by the Bombay Hospital, Mumbai and contended that the respondent did have the symptoms of the said disease for last more than one year and which she ought to have disclosed to the appellant while taking out the policy. Our attention was also drawn towards the exclusion Clause Nos. 4.0 and 4.1 contained in the said prospectus which entitled the Insurance Company to repudiate the claim if the insured while making proposal for the mediclaim insurance, suppressed any such disease existing on the date of such proposal and for the treatment of which ultimately the claim is preferred by the complainant. As against it Mr. Kunal Thakre, learned Counsel for respondent submitted that the said prospectus or the conditions contained therein were never disclosed to the respondent-insured nor did the same form part of the insurance policy. He further contended that no such disease existed on the date of taking out the policy inasmuch as the respondent had undergone extensive medical check up including X-ray of skull before taking out the said policy and no such disease or any symptom relating thereto existed on that date.

RESPONDENT-complainant has filed the document of the policy in evidence before the Forum below. As per this document the mediclaim insurance policy was issued in favour of the respondent as per schedule attached thereto. Neither the certificate of insurance nor the schedule attached therewith, contain any such exclusion clauses as pointed out by the learned Counsel for the appellant. The said prospectus was never made part of the policy. Under the circumstance, we are afraid, the appellant-insurer could not have taken recourse to the said exclusion clause for repudiating the claim of the respondent insured. Legal position on the point is made lucullant by Hon''ble Supreme Court in Modern Insulators Ltd. v. Oriental Insurance Co. Ltd., I (2000) CPJ 1 (SC)=II (2000) SLT 323=1986-2002 Consumer 5973 (NC) in following terms: "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 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 contact of insurance nor disclosed to the appellant, respondent cannot claim the benefit of the said exclusion clause. Therefore, the finding of the National Commission is untenable in law." Counsel for the appellant was unable to demonstrate that the said prospectus or the exclusion clauses contained therein were ever made known to the respondent-insured or the same were made part of the policy in question. Under the circumstances, the appellant, as held by the Supreme Court, cannot claim benefit of the said exclusion clause. On facts also the repudiation of the complainant''s claim by the appellant was wholly unjustified. There is virtually no evidence on record that the respondent-insured at the time of taking out the policy suffered with any such ailment or to be more precise she knew existence of any such ailment while taking out the policy. On the contrary, there is over-whelming medical evidence on record to show that the respondent had undergone extensive medical checkup including X-ray of skull showing that she had no such ailment. As per Oxford Medical Dictionary, "Schwannoma" means neurofibroma which is a benign tumour growing from the fibrous coverings of a peripheral nerve and it is usually symptomless. When it develops from the sheath of a nerve root, it causes pain and may compress the spinal cord. The term ''benign'' is used to describe any disorder or condition that does not produce harmful effects. As per medical certificates issued by Bombay Hospital, Mumbai the Schwannoma found in the body of the respondent was non-malignant and obviously it must have been symptomless giving no reason for the respondent to disclose any such symptom to the appellant-insurer while taking out the insurance policy. It was, therefore, wrong on the part of the appellant-insurer to accuse the respondent-insured of suppression of any such pre-existing disease and to repudiate her claim on that ground. The Forum below was thus right in decreeing the claim of the respondent and no interference is called for by this Commission in appeal.

THIS appeal thus fails and is dismissed with costs Rs. 500/-. A copy of this order be conveyed to the parties and a copy be sent to the District Forum along with the record of the case. Appeal dismissed.