NEW INDIA ASSURANCE COMPANY LTD. vs REKHA MALHOTRA & ORS.

Challenge in this Revision Petition by New India Assurance Co. Ltd. (for short "the Insurance Company") is to the order dated 28.11.2014, passed by the State Consumer Disputes Redressal Commission, Punjab at Chandigarh (for short "the State Commission") in First Appeal No.1636/2012. By the impugned order, while over-turning the order dated 23.10.2012, passed by the District Consumer Disputes Redressal Forum, Ludhiana (for short "the District Forum") in CC No.113 of 13.2.2012, whereby the Complaint was dismissed, the State Commission has allowed the Complaint with a direction to the Insurance Company to pay to the Complainants a sum of 4,19,325/- along with compensation of 10,000/- and litigation expenses quantified at 5,000/-, with a default stipulation that in case the order is not complied with within 45 days, the Complainant shall be entitled to interest at the rate of 9% p.a. from the date of its order till actual payment.

Briefly stated, the facts necessary for appreciating the controversy involved are : that the husband of Complainant No.1 and father of Complainants No.2 and 3, obtained a hospitalization and domiciliary hospitalization benefit policy called "Family floater Mediclaim Policy, from the Insurance Company for himself and his wife. The premium amounting to 27,716/- was paid. The policy issued on 10.6.2010 was valid for the period from 10.6.2010 to 9.6.2011.

During the tenure of the policy, the insured was admitted in the hospital from 7.7.2010 to 12.7.2010 with the Complaint of fever, cough associated with chills. He was diagnosed to be a patient of Pneumonia (lungs infection) as well as fibrocavtay disease - ABPA, systemic HT, DM-2, Acute and chronic renal failure and certain other serious complications. On 30.7.2010, the insured was shifted to another hospital, where he breathed his last on 31.7.2010.

On his death, the Complainants preferred claim with the Insurance Company for reimbursement of a sum of 4,19,325/- for the expenses incurred on his treatment in the hospital, under the Policy. After several reminders, finally vide letter dated 20.8.2011, the Insurance Company repudiated the claim on the following grounds :

" Claim is repudiated under Clause 4.1 of the policy as "Patient suffered from HTN, DM, AC on chronic renal failure, respiratory failure and patient had cardiac arrest and expired. Policy in first year of inception and less than two months old HTN DM and chronic renal failure are disease of chronic nature."

Being aggrieved, the Complainants filed the Complaint in the District Forum. The Complaint was resisted on behalf of the Insurance Company on diverse grounds, and mainly on the ground that as per Exclusion Clauses 4.1 and 4.3 of the terms and conditions of the policy, the claim was not admissible inasmuch as the insured husband had expired within two months of obtaining the policy. On consideration of the material placed before it, including the terms of the policy, the District Forum came to the conclusion that since the insured was admitted in the hospital within a short span of time of obtaining the policy for the first time, the claim made was not covered for two years from the date of inception of the policy and therefore, the Insurance Company was justified in repudiating the same.

Being dissatisfied with the said order, the Complainants carried the matter in Appeal to the State Commission. On re-appraisal of the material on record and taking note of Clauses 4.1 and 4.3, referred to above, the State Commission has come to the conclusion that Hypertension or Diabetes Mellitus is covered under Clauses 4.1 and 4.3 but the pre-existing disease of Chronic Renal Failure, the cause of death of the insured, was not covered under the said Exclusion Clauses and therefore, the Insurance Company was not justified in repudiating the claim. Accordingly, the State Commission allowed the Complaint with the afore-stated directions. Hence, the Revision Petition by the Insurance Company.

We have heard Learned counsel for the parties and perused the relevant record, including the terms and conditions in the policy. In our view, the State Commission has erred in properly construing the scope and purport of the Exclusions contained in the policy. For the sake of ready reference the relevant portion of the policy conditions is extracted below :

Pre-existing diseases/condition : All diseases/injuries/ conditions, which are pre-existing when the cover incepts for the first time (except as shown hereunder).Any complication arising from pre-existing disease/ailment/injury will be considered as a part of pre-existing condition.This exclusion will be deleted after four consecutive claim free policy year provided there was no hospitalization for the pre-existing disease/ailment/condition/injury during the said four years of insurance with our Company.

Compulsory Coverage For Specific Pre-Existing Conditions

On payment of additional premium, which is compulsory for persons suffering from pre-existing conditions of Diabetes Mellitus and Hypertension, these specific pre-existing conditions only are covered in the following manner :

1 st year No claim

2 nd year No claim

3 rd year 50% of admissible claim or 50% of the sum insured set for the individual whichever is less

4th year 75% of admissible claim or 75% of the sum insured set for the individual whichever is less

5 th year 100% of admissible claim or sum insured set for the individual whichever is less

It is manifest from a plain reading of the afore-extracted Clauses, in particular Clause 4.1 that if a policy is obtained by a person suffering from pre-existing conditions of Diabetes Mellitus and Hypertension, which case has to be considered under the category of "Compulsory Coverage for Specific Pre-Existing Conditions", no claim preferred under two years of its inception, is payable by the Insurance Company. In the instant case, indubitably, the insured was a patient of Diabetic Mellitus as well as Hypertension, as also of Coronary Disease. In our view the observation by the State Commission that since the cause of death of the insured was Chronic Renal Failure, the same did not fall within the ambit of the said Exclusion Clause, is not the correct interpretation of the otherwise unambiguous Exclusion Clause. Since admittedly the claim under the policy was preferred within a period of two years and as a matter of fact within two months of obtaining the same, it was squarely covered under the Exclusion Clause.

For the afore-going reasons the Revision Petition is allowed and the impugned order is set aside with no order as to costs.

If any amount has been deposited by the Insurance Company in terms of order dated 13.7.2015, the same shall be refunded on its moving appropriate application in that behalf.