New India Assurance Company Ltd vs DINESH KUMAR MITTAL

THIS appeal has been filed by the appellant Insurance Company against order dated 27. 11. 2002 passed by the District Forum, Jaipur 1st in complaint No. 1047/98 by which the complaint of the complainant-respondent was allowed against the appellants in the manner that the appellants were directed to pay a sum of Rs. 94,936, the amount incurred on the treatment of the daughter of complainant respondent within one month and if that amount was not paid within one month the appellants would pay interest @ 12% p. a. and further if the amount was not paid within three months the rate of interest would be 18% p. a.

IT arises in the following circumstances-That the complainant-respondent had filed a complaint before the District Forum on 7. 4. 1998 inter alia stating that he had taken a Mediclaim policy bearing No. 48-331200-00544 for himself, for his wife, son as well as for his daughter named Surabhi for a sum of Rs. 1 lac each from the appellants on 11. 4. 1997 and that policy was in force for the period 11. 4. 1997 to 10. 4. 1998. It was further stated in the complaint that his daughter Surabhi became ill suddenly and on 12. 7. 1997 she was got admitted in the Santokba Durlabhji Memorial Hospital (SDMH) where she was treated by Dr. Ashok Jain, Heart Specialist and during the treatment since heart disease was found, an instrument named Pacemaker was implanted in the heart of the daughter and she remained admitted in the hospital and a sum of Rs. 93,936. 92 was incurred by him in getting the treatment of his daughter and for that claim was preferred by the complainant before the office of the appellants but that claim was repudiated by the appellants through letter dated 17. 3. 98 in the following manner- "this has reference to above claim where baby Surabhi was admitted to Santokba Durlabhji Memorial Hospital and treated for a heart disease. While going through the available papers and medical report of Dr. Ashok Jain it is revealed that the above disease is a congenital condition i. e. the disease was prevalent since birth. In this condition we draw your attention to the policy terms and condition 4. 3 where congenital internal diseases are beyond the scope of the policy. Simultaneously the exclusion 4. 1 clearly states that all pre-existing diseases are also beyond the scope of the policy. In view of the policy terms and conditions we are enable to entertain the claim and repudiating the liability. We also like to add that under the contract of the policy you have violated the basic principle of good faith and also misrepresented the fact of not disclosing the disease at the time of proposal which have been taken for the first time i. e. under such circumstances also the claim liability is hereby repudiated which please note. "

Thereafter the present complaint was filed. A reply was filed by the appellants and they have taken the same pleas which were taken by them in the repudiation letter dated 17. 3. 1998 and it was prayed that the claim was rightly repudiated as the Surabhi was having a congenital disease of heart and since that fact was suppressed by the complainant at the time of taking the policy, therefore, claim was rightly repudiated on the ground of suppression of material facts on the part of the complainant and that disease was pre-existing disease. After hearing the parties, the District Forum, Jaipur 1st through order dated 27. 11. 2002 had allowed the complaint inter alia holding - (i) That the policy in question was taken by the complainant for his daughter on 11. 4. 1997 and for the first time she was got admitted in the hospital on 12. 7. 1997 where heart disease was detected and pacemaker was implanted in her heart. (ii) That prior to that complainant was not aware of the fact that she was a patient of heart. (iii) That for the first time the deceased was having heart disease by birth was revealed by Dr. Ashok Jain when the Surabhi was got admitted in the SDMH on 12. 7. 1999. (iv) That at the time when she was got admitted in the hospital, She was of six years'' old and as per the statement of Dr. Ashok Jain disease of Surabhi might be by birth but it was not necessary that the parents would have been aware of the disease. (v) That the appellants had failed to prove the fact that at the time of issuance of Mediclaim policy on 11. 4. 1997, the complainant was aware that his daughter was suffering from the disease of heart. (vi) That repudiation of claim of the complainant-respondent by the appellants was not justified and it amounted to deficiency in service on the part of the appellants. Aggrieved from the said order dated 27. 11. 2002 passed by the District Forum, Jaipur 1st, the appellant Insurance Company have preferred this appeal.

In this appeal the main contention of the learned Counsel for the appellants is that from the record of SDMH as well as from the statement of Dr. Ashok Jain the fact that Surabhi was having heart trouble by birth is well established and, therefore, at the time when the policy was taken on 11. 4. 1997 by the complainant for his daughter, he was aware of the fact that she was a patient of heart by birth and further as per certificate given by Dr. R. S. Garg on 1. 8. 2002 the fact that Surabhi was having heart trouble is well established and since these facts were not disclosed by the complainant at the time of taking the Mediclaim policy, therefore, it was a case of suppression of material facts on the part of the complainant regarding health of Surabhi and thus claim was rightly repudiated by the appellants and the District Forum has committed serious error and illegality in decreeing the claim of the complainant-respondent. The findings of the District Forum are wholly erroneous, illegal and perverse one and, therefore, the same cannot be sustained and liable to be set aside and this appeal deserves to be allowed.

On the other hand the learned Counsel for the respondent has supported the impugned order.

WE have heard the learned Counsel appearing for the appellants as well as for the respondent and gone through the entire materials available on record. There is no dispute on the point that the complainant had taken a Mediclaim policy for a sum of Rs. l lac for his daughter on 11. 4. 1997 and that was in force for the period 11. 4. 1997 to 10. 4. 1998.

THERE is also no dispute on the point that as per discharge ticket of SDMH Surabhi was got admitted in that hospital on 11. 7. 1997 having heart trouble and was discharged from the hospital on 17. 7. 1997 and during that period a permanent pacemaker was implanted in her heart and at that time she was of six years'' old. There is also no dispute on the point that Dr. Ashok Jain who had treated Surabhi in the SDMH was being examined before the District Forum and in that statement he had stated following facts- (i) That during the examination it was found that Surabhi was having heart trouble by birth and that it was not necessary that parents would be aware of the fact that Surabhi was having heart trouble by birth. There is also no dispute on the point that Dr. R. S. Garg has given a certificate on 1. 8. 2002 in the following manner- "in your above reference, when I was posted at Government Hospital, Baseri, Distt. Dholpur (Raj.) I had attended baby Surabhi in emergency as an emergency case. At that time, I also refer her to consult pediatrician for final diagnosis. Now, it is difficult to say, the time span of heart trouble of baby Surabhi, I think it is since then, she is suffering with heart trouble. As far as, I know that no other member of her family is suffering with heart disease. Regarding records, I does not have any medical treatment records of her family member because long time has passed. This is for your kind information. "

THERE is no dispute on the point that apart from the above facts there is nothing on record to prove the fact that Surabhi had taken any treatment of heart from any hospital or from anywhere from any doctor.

THUS, in the facts and circumstances just narrated above, the question for consideration is whether repudiation of claim of complainant respondent by the appellants on ground of suppression of heart disease was justified or not or whether the findings of the District Forum decreeing the claim could be sustained or not. It may be clarified here that Mediclaim could be repudiated by the Insurance Company on the grounds of misrepresentation, fraud or non-disclosure of material facts that existed at the inception of the contract. Therefore, in this case main issue which has to be decided is whether on the date i. e. on 11. 4. 1997 the complainant-respondent was aware of the fact that his daughter was heart patient by birth or not and whether the present case is a case of suppression of material facts on the part of the complainant respondent in respect of heart trouble of Surabhi or not. On suppression of material facts

It may be stated here 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 knew. 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 and in this respect, the decision of the Hon''ble Supreme Court in M/s. Modern Insulators Ltd. v. Oriental Insurance Co. Ltd. , I (2000) CPJ 1 (SC)=ii (2000) SLT 323=air 2000 SC 1014, may be referred to.

THE onus probandi, in cases of fraudulent suppression of material facts rests heavily on party alleging fraud namely the insurer. In this respect, the decision of the Hon''ble Supreme Court in LIC v. Smt. G. M. Channabasemma, I (1991) ACC 411 (SC), may be referred to where it was held that the burden of proving that the insured had made false representation and suppressed material facts is undoubtedly on the LIC of India. Furthermore, mere concealment of some facts will not amount to concealment of material facts and if there is fraudulent suppression of material facts in the proposal, the policy could be vitiated otherwise not. Suppression of fact must be a conscious operation of the giver of the answer which he knowingly did not disclose.

THE Hon''ble National Commission in National Insurance Co. Ltd. v. Bipul Kundu, II (2005) CPJ 12 (NC)=2005 CTJ 377 (CP) (NCDRC) , has held that for repudiating a claim of an insured, it is for the insurer to show that a statement on a fact, which was material for the policy, had been suppressed by the insured and that statement was fraudulently made by him/her with the knowledge of the falsity of that statement The word "misrepresentation" means suggestio falsi, in matter of substance essentially material to the subject, whether by acts or by words, by manoeuvres, or by positive assertions or material concealment (suppressio veri) whereby a person is misled and damnified. The word "fraud" means a conduct either by letter or words, which induces the other person, or authority to take a definite determinative stand as a response to the conduct of former either by word or letter. In this respect, the decision of the Hon''ble Supreme Court in Ram Preeti Yadav v. UP Board of High School and Intermediate Education and Ors. , V (2003) SLT 394=jt 2003 (Supp. I) SC 25 , may be referred to.

IT is well settled that misrepresentation itself amounts to fraud in some cases.

THE word "misconduct" means an act or conduct in the nature of a breach of trust or an act resulting in loss to other party. The word "suppression of fact" envisages a deliberate or conscious omission to state of fact with the intention ot deriving wrongful gain. In this respect, the decision of the Hon''ble Supreme Court in Collector of Customs, Calcutta v. Tin Plate Co. of India Ltd. , (1997) 10 SCC 538. may be referred to.

Keeping the above legal position and definitions in mind, the facts of the present case are being examined.

IN this case from the discharge ticket it is very much clear that Surabhi was got admitted in the SDMH on 11. 7. 1997 and she was discharged on 17. 7. 1997 and for the first time she was admitted in the hospital for taking treatment of heart though the policy in question was taken by the complainant on 11. 4. 1997. In our considered opinion, since there is no documentary proof or evidence available on record to show that Surabhi was admitted in the hospital for taking the treatment of heart disease prior to 11. 4. 1997, therefore, it could not be said that the complainant was guilty of suppression of material facts regarding health of daughter Surabhi. Thus the appellants Insurance Company had failed to produce any document or paper to show that Surabhi had taken treatment of heart disease prior to 11. 4. 1997 and, therefore, it could not be said that it was a case of suppression of material facts regarding health in respect of Surabhi on the part of complainant-respondent.

THE learned Counsel for the appellants has given much stress on the certificate dated 1. 8. 2002 given by Dr. R. S. Garg and that letter had already been reproduced above. A bare perusal of that letter reveals that the doctor concerned had treated the Surabhi in the Government Hospital, Baseri, Distt. Dholpur and she was referred by that doctor to consult pediatrician for final diagnosis. Meaning thereby even that Dr. R. S. Garg had not come to the conclusion that she was a patient of heart. Apart from that, in that letter it was not mentioned that when she was attended by him and when he had referred the case for further treatment to any doctor and thus from that letter it could not be held that the complainant was aware of the fact that Surabhi was a patient of heart by birth. Thus we are of the opinion that this letter would not be at all helpfull to the appellant Insurance Company. Furthermore, for diagnosing the heart disease, some necessary tests are ECG, Echo, Doppler, Angiography, etc. and until and unless they are done, heart disease could not be diagnosed. In the present case, there is nothing on record to suggest that prior to taking the first treatment at SDMH where she was got admitted on 11. 7. 1997 she had taken treatment for heart. As stated above the certificate of Dr. R. S. Garg was not found sufficient to prove the fact that she was the patient of heart by birth.

IN the present case Surabhi had gone for heart test for the first time after 11. 4. 1997 when she was got admitted in the SDMH where heart trouble was found and Pacemaker was implanted, therefore, it could not be said that the complainant was aware of the fact that she was suffering from heart disease at the time of taking the policy on 11. 4. 1997. Thus, it could be said that at the time of taking the policy on 11. 4. 1997 for his daughter Surabhi, the complainant was not aware of the fact that she was suffering from heart trouble and it could not be said that he was guilty of suppression of material facts.

FOR the reasons stated above, the appellants were not justified in repudiating the claim of the complainant-respondent on the ground of suppression of material facts regarding heart disease by the complainant and the appellants have repudiated the claim of the complainant respondent without any basis and on wrong assumption and in an arbitrary manner and repudiation of claim amounted to deficiency in service on the part of the appellants and the District Forum has rightly held so. The findings of the District Forum decreeing the claim are based on correct appreciation of entire materials and evidence available on record and they do not suffer from any basic infirmity or illegality or perversity. Hence, no interference is called for with the same and this appeal deserves to be dismissed on merits. On point of interest It may be stated here that the District Forum had awarded interest @ 12% p. a. and later on 18% p. a. on the decretal amount and in our considerd opinion the rate of interest must be treated as 9% p. a. throughout from the date of filing of the complaint. In view of the discussion made above, this appeal filed by the appellants on merits is dismissed. However, on point of interest, this appeal is partly allowed in the manner that the appellant Insurance Company would pay interest @ 9% p. a. on Rs. 94,936 to the complainant-respondent from the date of filing of the complaint till the payment is made. To that extent the impugned order dated 27. 11. 2002 passed by the District Forum, Jaipur 1st stands modified. Appeal dismissed.