2009 (7) TMI 1375 - SC - Indian Laws

Insurer's repudiation of mediclaim policy upheld due to non-disclosure of chronic diabetes and renal failure in proposal form

Satwant Kaur Sandhu Versus New India Assurance Company Ltd.

SC upheld insurer's repudiation of mediclaim policy claim due to non-disclosure of chronic diabetes and renal failure in proposal form. Deceased had ... Mediclaim policy - non-disclosure of chronic Diabetes and Renal failure in the proposal form - repudiation of the claim - suppression of material facts - whether to accept or not to accept the risk is a 'material fact' - HELD THAT:- It is also pertinent to note that in the claim form the appellant had stated that the deceased was suffering from Chronic Renal Failure and Diabetic Nephropathy from 1st June, 1990, i.e. within three weeks of taking the policy. Judged from any angle, we have no hesitation in coming to the conclusion that the statement made by the insured in the proposal form as to the state of his health was palpably untrue to his knowledge. There was clear suppression of material facts in regard to the health of the insured and, therefore, the respondent - insurer was fully justified in repudiating the insurance contract. We do not find any substance in the contention of learned Counsel for the appellant that reliance could not be placed on the certificate obtained by the respondent from the hospital, where the insured was treated. Apart from the fact that at no stage the appellant had pleaded that the insured was not treated at Vijaya Health Centre at Chennai, where he ultimately died. It is more than clear from the said certificate that information about the medical history of the deceased must have been supplied by his family members at the time of admission in the hospital, a normal practice in any hospital. Significantly, even the declaration in the proposal form by the proposer authorises the insurer to seek information from any hospital he had attended or may attend concerning any decease or illness which may affect his health. It is true that there is an apparent error in the order of the National Commission, inasmuch as the State Commission had, in fact, disagreed with the view taken by the District Forum but having regard to the fact that on our independent examination of the material on record, the claim by the appellant has been found to be fraudulent, we are of the opinion that no useful purpose would be served by remitting the matter to the National Commission for fresh adjudication on merits. Thus, we do not find any merit in this appeal, which is dismissed accordingly but with no order as to costs. Issues Involved:1. Deficiency in service by the Insurance Company.2. Suppression of material facts by the insured.3. Applicability of Section 45 of the Insurance Act, 1938.4. Validity of the National Commission's order.Summary:1. Deficiency in Service by the Insurance Company:The appellant claimed compensation for deficiency in service by the respondent - Insurance Company for not processing her claim u/s a mediclaim policy. The District Forum initially found the Insurance Company guilty of deficiency in service due to inordinate delay in deciding the claim and directed the respondent to pay the claimed amount with interest and litigation costs. However, the State Commission overturned this decision, stating that there was no deficiency in service as the repudiation of the claim was based on material facts.2. Suppression of Material Facts by the Insured:The core issue was whether the insured's non-disclosure of his chronic Diabetes and Renal failure at the time of taking out the mediclaim policy constituted suppression of material facts. The Supreme Court held that the insured was under a solemn obligation to make a true and full disclosure of his health condition. The insured's statement in the proposal form that he was in 'Sound Health' was found to be palpably untrue. The Court concluded that there was clear suppression of material facts, justifying the Insurance Company's repudiation of the claim.3. Applicability of Section 45 of the Insurance Act, 1938:The Court clarified that Section 45 of the Insurance Act, 1938, which restricts the right of the insurer to call in question a life insurance policy on the ground of mis-statement after a particular period, does not apply to mediclaim policies. A mediclaim policy is a non-life insurance policy meant to cover certain expenses related to injury, accidents, or hospitalizations and falls under the category of contract uberrimae fidei (utmost good faith).4. Validity of the National Commission's Order:The appellant contended that the National Commission erred in upholding the State Commission's order on the premise of 'concurrent finding of fact' when both the Forums had arrived at different findings. The Supreme Court acknowledged the error but found that the claim was fraudulent based on its independent examination of the material on record. Therefore, it dismissed the appeal, stating that no useful purpose would be served by remitting the matter to the National Commission for fresh adjudication on merits.Conclusion:The Supreme Court dismissed the appeal, affirming that the insured's non-disclosure of his health condition constituted suppression of material facts, thereby justifying the Insurance Company's repudiation of the claim. The Court also clarified that Section 45 of the Insurance Act, 1938, does not apply to mediclaim policies.