# MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO. LTD. & ANR

- **Citation:** [2021] 11 S.C.R. 1138
- **Court:** Supreme Court of India
- **Decided:** 2021-12-06
- **Case number:** Civil Appeal No. 8386 of 2015
- **Bench:** Dr. Dhananjaya Y Chandrachud, B. V. Nagarathna
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/manmohan-nanda-v-united-india-assurance-co-ltd-anr-34742
- **Pages:** 43

## Headnote

Consumer Protection Act, 1986 - s.21 - Insurance -
Repudiation of claim on ground of suppression or non-disclosure
of material facts - Appellant intended to travel to the USA -
Appellant was issued a overseas mediclaim business and holiday
policy - The appellant was medically examined at the instance of
respondent No. 1 insurance company prior to the consideration of
his request for issuance of a mediclaim policy - The medical report
categorically noted that the appellant had diabetes-type II (mellitusII) - No other adverse medical condition was found - In the medical
exam report, specific queries were sought as to whether any
abnormalities were observed in the electrocardiogram test of the
appellant and any possible illness or disease for which the appellant
may require medical treatment in the ensuing trip to the USA - To
both these queries, the doctor who examined the appellant had
answered "normal" and "no" respectively - The insurer thereafter
accepted the proposal form - Thereafter, the appellant boarded a
flight to USA, on exiting the airport, appellant felt weak and started
sweating - He was admittted at a medical centre - Three stents were
inserted to remove blockage from his heart vessels - Appellant
claimed benefit under the mediclaim policy - However, appellant
received a letter from respondent stating that his claim had been
repudiated as the appellant had a history of hyperlipidaemia and
diabetes and the policy did not cover pre-existing conditions and
complications arising therefrom - Aggrieved, the appellant filed a
complaint u/s.21(9) of the 1986 Act - The Commission held that
concealment or non-disclosure of material facts regarding preexisting heart ailment was a valid ground for repudiation of the
insurance claim by the respondent-insurer - On appeal, held:
Appellant had in the proposal form disclosed that he was suffering
from diabetes mellitus-II and for which the medical test reports were
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submitted along with the proposal form which were considered by
the insurance company before the policy was issued to the appellant
- In fact, the appellant stated in his representation against the
repudiation of the policy that he was taking lipid-lowering medicines
not because he was suffering from hyperlipidaemia but as it was
customary to take such medication for prevention of cardio-vascular
complications in diabetics - He also stated that he had informed
the physician-doctor, who examined him prior to obtaining the policy,
of the medicines he was taking - Therefore, the insurance company
was well aware of the fact that the insured was a diabetic and was
taking all necessary medication for preventing further complications
and controlling the disease - Hence, there was no suppression of
any material fact by the appellant to the insurer - The repudiation
of the policy by the respondent insurance company was illegal and
not in accordance with law - Consequently, the appellant entitled
to be indemnified under the policy.
Insurance - Mediclaim Policy - After assessment of medical
condition - Held: The insurer must be able to assess the likely risks
that may arise from the status of health and existing disease, if any,
disclosed by the insured in the proposal form before issuing the
insurance policy - Once the policy has been issued after assessing
the medical condition of the insured, the insurer cannot repudiate
the claim by citing an existing medical condition which was disclosed
by the insured in the proposal form, which condition has led to a
particular risk in respect of which the claim has been made by the
insured.
Insurance - Mediclaim Policy - Object of - Held: The object
of seeking a mediclaim policy is to seek indemnification in respect
of a sudden illness or sickness which is not expected or imminent
and which may occur overseas - If the insured suffers a sudden
sickness or ailment which is not expressly excluded under the policy,
a duty is cast on the insurer to indemnify the appellant

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SUPREME COURT REPORTS
[2021] 11 S.C.R.
[2021] 11 S.C.R. 1138
1138
MANMOHAN NANDA
v.
UNITED INDIA ASSURANCE CO. LTD. & ANR
(Civil Appeal No. 8386/2015)
DECEMBER 6, 2021
[DR. DHANANJAYA Y CHANDRACHUD AND
B. V. NAGARATHNA, JJ.]
Consumer Protection Act, 1986 - s.21 - Insurance -
Repudiation of claim on ground of suppression or non-disclosure
of material facts - Appellant intended to travel to the USA -
Appellant was issued a overseas mediclaim business and holiday
policy - The appellant was medically examined at the instance of
respondent No. 1 insurance company prior to the consideration of
his request for issuance of a mediclaim policy - The medical report
categorically noted that the appellant had diabetes-type II (mellitusII) - No other adverse medical condition was found - In the medical
exam report, specific queries were sought as to whether any
abnormalities were observed in the electrocardiogram test of the
appellant and any possible illness or disease for which the appellant
may require medical treatment in the ensuing trip to the USA - To
both these queries, the doctor who examined the appellant had
answered "normal" and "no" respectively - The insurer thereafter
accepted the proposal form - Thereafter, the appellant boarded a
flight to USA, on exiting the airport, appellant felt weak and started
sweating - He was admittted at a medical centre - Three stents were
inserted to remove blockage from his heart vessels - Appellant
claimed benefit under the mediclaim policy - However, appellant
received a letter from respondent stating that his claim had been
repudiated as the appellant had a history of hyperlipidaemia and
diabetes and the policy did not cover pre-existing conditions and
complications arising therefrom - Aggrieved, the appellant filed a
complaint u/s.21(9) of the 1986 Act - The Commission held that
concealment or non-disclosure of material facts regarding preexisting heart ailment was a valid ground for repudiation of the
insurance claim by the respondent-insurer - On appeal, held:
Appellant had in the proposal form disclosed that he was suffering
from diabetes mellitus-II and for which the medical test reports were
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submitted along with the proposal form which were considered by
the insurance company before the policy was issued to the appellant
- In fact, the appellant stated in his representation against the
repudiation of the policy that he was taking lipid-lowering medicines
not because he was suffering from hyperlipidaemia but as it was
customary to take such medication for prevention of cardio-vascular
complications in diabetics - He also stated that he had informed
the physician-doctor, who examined him prior to obtaining the policy,
of the medicines he was taking - Therefore, the insurance company
was well aware of the fact that the insured was a diabetic and was
taking all necessary medication for preventing further complications
and controlling the disease - Hence, there was no suppression of
any material fact by the appellant to the insurer - The repudiation
of the policy by the respondent insurance company was illegal and
not in accordance with law - Consequently, the appellant entitled
to be indemnified under the policy.
Insurance - Mediclaim Policy - After assessment of medical
condition - Held: The insurer must be able to assess the likely risks
that may arise from the status of health and existing disease, if any,
disclosed by the insured in the proposal form before issuing the
insurance policy - Once the policy has been issued after assessing
the medical condition of the insured, the insurer cannot repudiate
the claim by citing an existing medical condition which was disclosed
by the insured in the proposal form, which condition has led to a
particular risk in respect of which the claim has been made by the
insured.
Insurance - Mediclaim Policy - Object of - Held: The object
of seeking a mediclaim policy is to seek indemnification in respect
of a sudden illness or sickness which is not expected or imminent
and which may occur overseas - If the insured suffers a sudden
sickness or ailment which is not expressly excluded under the policy,
a duty is cast on the insurer to indemnify the appellant for the
expenses incurred thereunder.
Doctrine/Principle - Principle of 'uberima fides' between
insurer and insured - Held: The insured has a duty to disclose all
material facts, the insurer must also inform the insured about the
terms and conditions of the policy that is going to be issued to him
and must strictly conform to the statements in the proposal form or
prospectus, or those made through his agents - Thus, the principle
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO.
LTD. & ANR.
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SUPREME COURT REPORTS
[2021] 11 S.C.R.
of utmost good faith imposes meaningful reciprocal duties owed by
the insured to the insurer and vice versa - This inherent duty of
disclosure was a common law duty of good faith originally founded
in equity but has later been statutorily recognised - It is also open
to the parties entering into a contract to extend the duty or restrict
it by the terms of the contract.
Insurance - Mediclaim Policy - Contra Proferentem Rule -
Appellant claimed insurance under a mediclaim policy -
Respondents contended that as per the terms and conditions of the
policy "all the complications arising out of pre-existing condition
is not payable" - Claim was repudiated - Held: Respondents were
not right in stating that as per the terms and conditions of the policy
"all the complications arising out of pre-existing condition is not
payable" - Acute myocardial infraction can occur in a person who
has no history of diabetes mellitus-II - One of the risk factors for
the aforesaid cardiac episode is diabetes mellitus-II - The fact that
the appellant had diabetes mellitus-II was made known to the
insurance company - The aforesaid clause has to be read against
the respondent insurer by applying the contra proferentem rule against
it - Otherwise, the very contract of insurance would become
meaningless in the instant case - Hence, the respondent-insurance
company was not right in repudiating the policy in question.
Words and Phrases - "Material Fact" in insurance policy -
Held: What constitutes a material fact would depend upon the nature
of the insurance policy to be taken, the risk to be covered, as well
as the queries that are raised in the proposal form - If specific
queries are made in a proposal form then it is expected that specific
answers are given by the insured who is bound by the duty to
disclose all material facts.
Allowing the appeal, the Court
HELD: Uberrimae Fidei
1. The insurance contracts are special contracts based on
the general principles of full disclosure inasmuch as a person
seeking insurance is bound to disclose all material facts relating
to the risk involved. Law demands a higher standard of good
faith in matters of insurance contracts which is expressed in the
legal maxim uberrimae fidei. [Para 30][1157-B-C]
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2. Just as the insured has a duty to disclose all material
facts, the insurer must also inform the insured about the terms
and conditions of the policy that is going to be issued to him and
must strictly conform to the statements in the proposal form or
prospectus, or those made through his agents. Thus, the principle
of utmost good faith imposes meaningful reciprocal duties owed
by the insured to the insurer and vice versa. This inherent duty of
disclosure was a common law duty of good faith originally founded
in equity but has later been statutorily recognised as noted above.
It is also open to the parties entering into a contract to
extend the duty or restrict it by the terms of the contract.
[Para 34][1159-A-C]
3. Full disclosure must be made of all relevant facts and
matters that have occurred up to the time at which there is a
concluded contract. It follows from this principle that the
materiality of a particular fact is determined by the circumstances
existing at the time when it ought to have been disclosed, and
not by the events which may subsequently transpire. The duty to
make full disclosure continues to apply throughout negotiations
for the contract but it comes to an end when the contract is
concluded; therefore, material facts which come to the proposer's
knowledge subsequently need not be disclosed. [Para 40]
[1160-D-F]
4. Thus, a proposer is under a duty to disclose to the insurer
all material facts as are within his knowledge. The proposer is
presumed to know all the facts and circumstances concerning
the proposed insurance. Whilst the proposer can only disclose
what is known to him, the proposer's duty of disclosure is not
confined to his actual knowledge, it also extends to those material
facts which, in the ordinary course of business, he ought to know.
However, the assured is not under a duty to disclose facts which
he did not know and which he could not reasonably be expected
to know at the material time. The second aspect of the duty of
good faith arises in relation to representations made during the
course of negotiations, and for this purpose all statements in
relation to material facts made by the proposer during the course
of negotiations for the contract constitute representations and
must be made in good faith. [Para 41][1160-F-H]
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO.
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5. The basic rules to be observed in making a proposal for
insurance may be summarized as follows :
(a) A fair and reasonable construction must be put upon the
language of the question which is asked, and the answer given
will be similarly construed. This involves close attention to the
language used in either case, as the question may be so framed
that an unqualified answer amounts to an assertion by the
proposer that he has knowledge of the facts and that the
knowledge is being imparted. However, provided these canons
are observed, accuracy in all matters of substance will suffice
and misstatements or omissions in trifling and insubstantial
respects will be ignored; (b) Carelessness is no excuse, unless
the error is so obvious that no one could be regarded as misled.
If the proposer puts 'no' when he means 'yes' it will not avail him
to say it was a slip of the pen; the answer is plainly the reverse of
the truth; (c) An answer which is literally accurate, so far as it
extends, will not suffice if it is misleading by reason of what is not
stated. It may be quite accurate for the proposer to state that he
has made a claim previously on an insurance company, but the
answer is untrue if in fact he has made more than one; (d) Where
the space for an answer is left blank, leaving the question unanswered, the reasonable inference may be that there is nothing
to enter as an answer. If in fact there is something to enter as an
answer, the insurers are misled in that their reasonable inference
is belied. It will then be a matter of construction whether this is a
mere non-disclosure, the proposer having made no positive
statement at all, or whether in substance he is to be regarded as
having asserted that there is in fact nothing to state; (e) Where
an answer is unsatisfactory, as being on the face of it incomplete
or inconsistent the insurers may, as reasonable men, be regarded
as put on inquiry, so that if they issue a policy without any further
enquiry they are assumed to have waived any further information.
However, having regard to the inference mentioned in head (4)
above, the mere leaving of a blank space will not normally be
regarded as sufficient to put the insurers on inquiry; (f) A proposer
may find it convenient to bracket together two or more questions
and give a composite answer. There is no objection to his doing
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so, provided the insurers are given adequate and accurate
information on all points covered by the questions; (g) Any answer
given, however accurate and honest at the time it was written
down, must be corrected if, up to the time of acceptance of the
proposal, any event or circumstance supervenes to make it
inaccurate or misleading. [Para 42] [1161-A-H; 1162-A-C]
Contra Proferentem Rule
6. The Contra Proferentem Rule has an ancient genesis.
When words are to be construed, resulting in two alternative
interpretations then, the interpretation which is against the person
using or drafting the words or expressions which have given rise
to the difficulty in construction, applies. This Rule is often invoked
while interpreting standard form contracts. Such contracts heavily
comprise of forms with printed terms which are invariably used
for the same kind of contracts. Also, such contracts are harshly
worded against individuals and not read and understood most
often, resulting in grave legal implications. When such standard
form contracts ordinarily contain exception clauses, they are
invariably construed contra proferentem rule against the person
who has drafted the same. [Para 44][1162-F-H]
7. On a consideration of the aforesaid judgments, the
following principles would emerge: (i) There is a duty or obligation
of disclosure by the insured regarding any material fact at the
time of making the proposal. What constitutes a material fact
would depend upon the nature of the insurance policy to be taken,
the risk to be covered, as well as the queries that are raised in
the proposal form; (ii) What may be a material fact in a case would
also depend upon the health and medical condition of the
proposer; (iii) If specific queries are made in a proposal form
then it is expected that specific answers are given by the insured
who is bound by the duty to disclose all material facts; (iv) If any
query or column in a proposal form is left blank then the insurance
company must ask the insured to fill it up. If in spite of any column
being left blank, the insurance company accepts the premium
and issues a policy, it cannot at a later stage, when a claim is
made under the policy, say that there was a suppression or nonMANMOHAN NANDA v. UNITED INDIA ASSURANCE CO.
LTD. & ANR.
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[2021] 11 S.C.R.
disclosure of a material fact, and seek to repudiate the claim; (v)
The insurance company has the right to seek details regarding
medical condition, if any, of the proposer by getting the proposer
examined by one of its empanelled doctors. If, on the consideration
of the medical report, the insurance company is satisfied about
the medical condition of the proposer and that there is no risk of
pre-existing illness, and on such satisfaction it has issued the
policy, it cannot thereafter, contend that there was a possible preexisting illness or sickness which has led to the claim being made
by the insured and for that reason repudiate the claim; (vi) The
insurer must be able to assess the likely risks that may arise
from the status of health and existing disease, if any, disclosed by
the insured in the proposal form before issuing the insurance
policy. Once the policy has been issued after assessing the
medical condition of the insured, the insurer cannot repudiate
the claim by citing an existing medical condition which was
disclosed by the insured in the proposal form, which condition
has led to a particular risk in respect of which the claim has been
made by the insured; (vii) In other words, a prudent insurer has
to gauge the possible risk that the policy would have to cover
and accordingly decide to either accept the proposal form and
issue a policy or decline to do so. Such an exercise is dependant
on the queries made in the proposal form and the answer to the
said queries given by the proposer. [Para 52][1172-A-G]
8. The respondent insurance company could not have
repudiated the policy on the ground that acute myocardial
infraction suffered by the appellant on landing at San Francisco,
USA was a "pre-existing and related complication" which was
excluded under the policy. The insurer was informed about the
pre-existing condition of the appellant, namely, diabetes mallitusII and it was for insurer to gauge a related complication under
the policy as a prudent insurer and then issue the policy when
satisfied. In the absence of the same, the treatment availed by
the appellant for acute myocardial infraction in USA could not
have been termed as a direct offshoot of hyperlipidaemia and
diabetes mellitus so as to be labelled as a pre-existing disease or
illness which the appellant suffered from and had not disclosed
the same. At any rate, the appellant had in the proposal form
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disclosed that he was suffering from diabetes mellitus-II and for
which the medical test reports were submitted along with the
proposal form which were considered by the insurance company
before the policy was issued to the appellant. In fact, the appellant
stated in his representation dated 16th November, 2009, against
the repudiation of the policy that he was taking lipid-lowering
medicines not because he was suffering from hyperlipidaemia but
as it was customary to take such medication for prevention of
cardio-vascular complications in diabetics. He also stated that
he had informed the physician, who examined him prior to
obtaining the policy, of the medicines he had been taking.
Therefore, the insurance company was well aware of the fact that
the insured was a diabetic and was taking all necessary medication
for preventing further complications and controlling the disease.
Hence in view of this Court, there was no suppression of any
material fact by the appellant to the insurer. [Para 66][1177-H;
1178-A-E]
10. Further on the disclosures made by the appellant with
regard to his existing disease, namely diabetes mellitus-II, the
insurance company considered the same and issued the policy in
question to the appellant. The respondent insurance company as
a prudent insurer considered the details given by the appellant
in the proposal form and issued the policy. The insurance company
did not think that the medical and health condition of the appellant
was such which did not warrant issuance of a mediclaim policy.
The insurance company therefore did not decline the proposal of
the assured as a prudent insurer. [Para 67][1178-F-G]
11. Therefore, the respondents were not right in stating
that as per the terms and conditions of the policy "all the
complications arising out of pre-existing condition is not payable."
As already noted, acute myocardial infraction can occur in a person
who has no history of diabetes mellitus-II. One of the risk factors
for the aforesaid cardiac episode is diabetes mellitus-II. The fact
that the appellant had diabetes mellitus-II was made known to
the insurance company. Therefore, it is observed that any
complication which would arise from diabetes mellitus-II was also
within the consideration of the insurer. Despite the aforesaid facts
regarding the medical record of the insured, the insurance
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO.
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company decided to issue the policy to the appellant. The aforesaid
clause has to be read against the respondent insurer by applying
the contra proferentem rule against it. Otherwise, the very contract
of insurance would become meaningless in the instant case.
Hence, in considered view of this Court, the respondent-insurance
company was not right in repudiating the policy in question.
[Para 68][1178-G-H; 1179-A-C]
General Assurance Society Ltd., v. Chandmull Jain AIR
1966 SC 1644; Delhi Development Authority v. Durga
Chand Kaushish AIR 1973 SC 2609; Md. Kamgarh
Shah v. Jagdish Chandra AIR 1960 SC 953; United
India Insurance Co. Ltd. v. Orient Treasures (P) (2016)
3 SCC 49 : [2016] 1 SCR 1; Central Bank of India v.
Hartford Fire Insurance Co. Ltd. AIR 1965 SC 1288;
Sushilaben Indravadan Gandhi v. New India Assurance
Co. Ltd. (2021) 7 SCC 151 : 2020 (4) JT 539 - relied
on.
Satwant Kaur Sandhu v. New India Assurance Co.
(2009) 8 SCC316 : [2009] 10 SCR 560; Canara Bank
v. United India Insurance Co. (2020) 3 SCC 455 : 2020
(3) SCALE 228;Oriental Insurance Co Ltd. v. Mahendra
Construction (2019) 18 SCC 209; LIC of India v. Smt.
G.M. Channabasamma (1991) 1 SCC 357 : 1991 ( 5)
JT 73; Canara Bank v. United India Insurance Co.
(2020) 3 SCC 455: 2020 (3) SCALE 228; Hari Om
Agarwal v. Oriental Insurance Co. 2007 (98) DRJ 246;
Sushilaben Indravadan Gandhi and Ors. v. The New
India Assurance Co. Ltd. and Ors. (2021) 7 SCC 151 :
2020 (4) JT 539; Export Credit Guarantee Society v.
Garg Sons International (2014) 1 SCC 686 : [2013] 1
SCR 336; Satwant Kaur Sandhu v. New India
Assurance Co. (2009) 8 SCC 316 : [2009] 10 SCR 560;
LIC of India v. Smt. G.M. Channabasemma (1991) 1
SCC 357 : 1991 (5) JT 73; Canara Bank v. United
India Insurance Co. (2020) 3 SCC 455 : 2020 (3)
SCALE 228; Reliance Life Insurance v. Rekhaben
Nareshbhai Rathod, (2019) 6 SCC 175: [2019] 6 SCR
733; Life Insurance Corporation of India v. Manish
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Gupta, (2019) 11 SCC 371; Branch Manager Bajaj
Allianz Life Insurance Co. v. Dalbir Kaur AIR 2020
SC 5210; Sulbha Prakash Motegaonkar and Ors. v.
Life Insurance Corporation of India, Civil Appeal No.
8245/2015; Meenakshi Saxena & Anr. Vs. ECGC
Limited (formerly known as Export Credit Guarantee
Corporation of India Limited) & Anr. - (2018) 7 SCC
479 : [2018] 5 SCR 421 - referred to.
Carter v. Boehm (1766) 3 Burr 1905; Reynolds v.
Phoenix Assurance Co. Ltd. (1978) 2 Lloyd's Rep. 440
- referred to.
Halsbury's Laws of England, Fourth Edition, Para 375,
Vol.25: Insurance; MacGillivray on Insurance Law (9th
Edition, Sweet and Maxwell London, 1997 at p.280);
Colinvaux's Law of Insurance (6th Edi., 1990 at p.42)
- referred to.
Case Law Reference
[2009] 10 SCR 560
referred to
Para 12
[2016] 1 SCR 1
relied on
Para 45 (e)
[2013] 1 SCR 336
referred to
Para 45 (f)
[2009] 10 SCR 560
referred to
Para 50 (i)
[2019] 6 SCR 733
referred to
Para 50 (ii)
[2018] 5 SCR 421
referred to
Para 71 (ii)
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8386
of 2015.
From the Judgment and Order dated 22.05.2015 of the National
Consumer Disputes Redressal Commission, New Delhi in Consumer
Complaint No.92 of 2010.
Gopal Sankaranarayanan, Sr. Adv., Ms. Zehra Khan, Shrutanjaya
Bhardwaj, Ms. Shreya Choudhary for M/s Law Associates, Advs. for
the Appellant.
Ms. Sunaina Phul, Mohit Paul, Advs. for the Respondents.
MANMOHAN NANDA v. UNITED INDIA ASSURANCE CO.
LTD. & ANR.
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The Judgment of the Court was delivered by
NAGARATHNA J.
1. This appeal assails order dated 22nd May, 2015, passed by the
National Consumer Disputes Redressal Commission (hereinafter referred
to as "the Commission" for brevity) in Consumer Complaint No. 92/
2010 by which the complaint filed by the appellant was dismissed.
2. The facts in a nutshell are that the appellant had sought an
overseas mediclaim policy- B (hereinafter referred to as "mediclaim
policy") as he intended to travel to the United States of America ("USA")
to attend the wedding of his sister-in-law's daughter. The appellant was
medically examined at the instance of respondent No. 1 insurance
company prior to the consideration of his request for issuance of a
mediclaim policy. On his medical examination, the report categorically
noted that the appellant had diabetes-type II (also known as diabetes
mellitus). No other adverse medical condition was found.
3. In the medical exam report, a specific query was sought as to
whether any abnormalities were observed in the electrocardiogram test
of the appellant. There was another query regarding any possible illness
or disease for which the appellant may require medical treatment in the
ensuing trip to the USA. To both these queries, Dr. Jitendra Jain, the
doctor who examined the appellant had answered "normal" and "no"
respectively. The representative of the respondent insurer on receipt of
the medical reports assured the appellant that on verification of the same
the policy would be issued.
4. The insurer thereafter accepted the proposal form and issued
the Overseas Mediclaim Business and Holiday Policy bearing Policy
Number 190100/46/09/ 44/70000008 valid from 19th May, 2009 to 1st
June, 2009, to the appellant. Thereafter, the appellant boarded a flight to
San Francisco, USA on 19th May, 2009 at around 1:00 a.m. from Delhi
airport and reached San Francisco on the same day at around 2:00 p.m.
(local time). On exiting the customs section at San Francisco airport,
appellant felt weak and started sweating. His wife got him admitted at
the SFO Medical Centre at San Francisco airport and after he received
initial medical treatment, he was shifted to the Mills Peninsula Medical
Centre (hereinafter referred to as "Medical Centre" for the sake of
brevity) where angioplasty was performed on the appellant on 19th May,
2009 and 22nd May and three stents were inserted to remove the blockage
from the heart vessels.
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5. In order to avail the benefit under the mediclaim policy,
appellant's son-in-law contacted M/s Corris International, a foreign
collaborator of respondent No. 1 and 2, which was to provide emergency
assistance and claims administration services to the insured. M/s Corris
International sought certain documents regarding details of treatment
given by the Medical Centre as well as details of the mediclaim policy
for the purpose of considering the same for indemnifying the appellant.
The appellant was discharged on 24th May, 2009.
6. Two and a half months thereafter, appellant started receiving
bills from the cardio vascular wing of the Medical Centre and SFO
Medical Centre towards the treatment he received at their facility. On
19th August, 2009, the appellant sent a letter annexing all bills in original
as well as the discharge summary to the Divisional Manager of
respondent No. 1 at their Bhopal office. The same letter was also sent
to respondent No. 2.
7. On 22nd August, 2009, appellant received a letter from
respondent No. 2 stating that his claim had been repudiated as the appellant
had a history of hyperlipidaemia and diabetes and the policy did not
cover per-existing conditions and complications arising therefrom. The
said repudiation was with regard to Bill No.1 i.e. the bill raised by the
Medical Centre for USD 2,29,719. The appellant protested against the
repudiation and requested his claim to be settled on a priority basis as
the Medical Centre and the other centre in the USA where he had taken
treatment had started pressing for release of payment. In this regard a
representation was sent on 16th November, 2009. However, by its letter
dated 9th April, 2010, respondent No.1 reiterated its repudiation of the
claim made by the appellant.
8. Being aggrieved, the appellant filed a complaint under Section
21 (9) of the Consumer Protection Act, 1986 (hereinafter referred to as
"Act" for brevity) against the respondents, being Consumer Complaint
No.92/2010 before the Commission. A reply was filed to the complaint
by respondent No.1 stating that appellant's claim was rightly rejected by
respondent No.2 on the ground of non-disclosure of a pre-existing disease
as the treatment report of the appellant showed prior medication such as
statins, which is a lipid lowering medicine. The said reply was filed on 3rd
March, 2011. Respondent No.2 also filed its reply on 27th April, 2011.
Appellant filed his rejoinder to the replies of the respondents in August,
2011. Appellant also filed an additional affidavit enclosing medical opinions
of three doctors on affidavit stating that prescription of statins to a person
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having diabetes-type II is by way of precaution and not because the
patient would be suffering from any cardiovascular disease. Respondent
No. 1 and 2 filed their evidence by way of affidavit and thereafter written
submissions were filed by both sides. Subsequently, the Commission
dismissed the complaint filed by the appellant on the ground of nondisclosure of material facts. Hence this appeal by the claimant.
9. Before proceeding further, it would be useful to encapsulate
the reasoning of the Commission for dismissing the complaint filed by
the appellant herein, as under:
(i)
The Commission concluded that the complainant had a
history of hyperlipidaemia and peptic-ulcer disease in
addition to diabetes mellitus. Since this was disclosed by
the complainant to medical authorities in the USA, the
Commission found that there was no reason why he could
not have disclosed the condition to the respondent- insurance
company at the time of obtaining the mediclaim policy.
(ii)
That statins are lipid lowering agents which are found
beneficial in primary and secondary prevention of cardiovascular complications in diabetics. Given that the
complainant had admitted that he had been under statin
medication, it was found that he had a pre-existing disease
of which disclosure had not been made.
(iii)
The Commission held that it was the duty of the complainant
to have ensured that complete facts about his health
condition were brought to the knowledge of the insurance
company at the time of obtaining the insurance policy. The
complainant breached this duty of disclosure and acted in a
manner contrary to the principle of 'uberima fides' between
the insurer and the insured.
(iv)
Having regard to general condition 10 of the policy, the
Commission found that for any sickness for which insured
had sought advice or had taken medical treatment even at
the time of issuance of policy, the insured was not entitled
to claim benefit under the policy owing to the "pre-existing
exclusion" under the policy.
 (v)
The Commission held that concealment or non-disclosure
of material facts regarding pre-existing heart ailment was
a valid ground for repudiation of the insurance claim by the
respondent - Insurer.
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10. We have heard Mr. Gopal Sankarnarayanan, learned Senior
Counsel along with Ms. Zehra khan, learned counsel, for the appellant
and Ms. Sunaina Phul, learned counsel for respondent No.1 and perused
the material on record.
11. Learned Senior Counsel for appellant submitted that the
appellant was about 55 years of age when he and his wife travelled to
San Francisco, USA to attend the wedding of his sister-in-law's daughter.
Appellant was issued overseas mediclaim policy by respondent No.1
after undergoing the requisite medical tests namely: 1) Blood sugar test,
2) Urine examination 3) Electrocardiogram test. Dr. Jitendra Jain,
Assistant Professor in the Department of Medicine, Peoples' Medical
College, Bhopal, examined the appellant and answered the medical
questionnaire as provided in the proposal form. The mediclaim policy,
issued to the appellant was for the period between 19th May, 2009 and
1st June, 2009 and was subsequently extended to 21st June, 2009. The
policy in question contained the nature of coverage and excluded preexisting conditions as defined in general condition 10. That on boarding
the flight to San Francisco from Delhi airport on 19th May, 2009, the
appellant travelled in good health and was fit on the flight. It is only on
arrival at San Francisco airport that the appellant felt weak and was
admitted to the SFO Medical Centre for preliminary treatment and was
later shifted to the Medical Centre. The appellant availed the treatment
for which the charges were USD 2,41,932, approximately Rs. 1,08,86,940
at Rs.45 per USD. Since the respondent insurer erroneously repudiated
the claim made by the appellant, the consumer complaint was filed before
the Commission. The Commission by its order dated 22nd May, 2015,
without appreciating the case of the appellant in its true perspective,
dismissed the complaint on the ground that appellant had not disclosed
true and complete information about his health while taking the policy
and therefore the repudiation clause applied.
12. It was contended by learned Senior Counsel along with learned
counsel for the appellant that the repudiation of the contract on the ground
of suppression of pre-existing disease by appellant was wholly erroneous.
Our attention was drawn to the fact that respondent No.1 had repudiated
the claim on the premise that the appellant was suffering from
hyperlipidaemia at the time of seeking the insurance policy and in fact
had been prescribed statins, which fact had not been disclosed to the
insurer. It was contended that the appellant had no knowledge that he
was suffering from hyperlipidaemia at the time of submission of the
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proposal form. The obligation to disclose any fact extends only when the
said fact is known to the appellant but not otherwise. In support of this
submission, reliance was placed on Satwant Kaur Sandhu v. New India
Assurance Co. - (2009) 8 SCC 316. In fact, the proposal form itself
stipulates that it should be completed to the best of the insured's
"knowledge and belief". The appellant had stated that he was not suffering
from hyperlipidaemia and that the same was diagnosed for the first time
on 19th May, 2009 at the Medical Centre in San Francisco. The doctor
had noted "hyperlipidaemia", under the column "IMPRESSION", after
examining the appellant on 21st May, 2009, but the same did not find a
place under "discharge diagnosis" issued to the appellant on 24th May,
2009. There was no intention to suppress any material fact by the appellant
at the time of filling the proposal form as the appellant had no knowledge
that he was suffering from hyperlipidaemia as on 15th May, 2009, when
the proposal form was filled by him.
13. It was next contended that the proposal form was worded in
such a manner that there was no specific query which could have led to
the appellant disclosing that he was suffering from hyperlipidaemia. This
argument was made as an alternative submission on the assumption that
the appellant had in fact knowledge that he was suffering from
hyperlipidaemia at the time of filling up of proposal form seeking insurance
policy.
14. It was further contended that the proposal form and the
insurance policy did not define the terms "pre-existing disease," "preexisting ailment," "pre-existing condition", "disease" or "illness." That
query number 2 of part 2 dealing with "medical history" in the proposal
form namely "have you ever suffered from any illness or disease up
to the date of making this proposal", was too vague and the appellant
left the column blank. Failure to fill in all the queries in the proposal form
cannot be termed as suppression or misdeclaration vide Canara Bank
v. United India Insurance Co. - (2020) 3 SCC 455.
15. Further, question number 5 which read, "Have you ever
suffered from any illness or disease or had any accident prior to
the first day of insurance" is also overarching as no person can answer
such a question in the negative. Every person to whom a mediclaim
policy is offered, would have, at some point of time, suffered from some
disease or illness but for the same to be considered as a pre-existing
disease, ailment, condition or illness on which ground a claim could be
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repudiated, there is need for a specific definition to be incorporated in
the policy. This is because every disease or illness cannot be considered
as a pre-existing disease or condition so as to exclude the benefit of the
policy to a policy holder. According to the learned Senior Counsel for the
appellant, the nature of a disease or illness which would exclude a policy
holder or an insured from the benefits of the said policy must be clearly
mentioned in the policy itself. The same cannot be vague or non-specific
so as to enable the insurer to interpret the policy to its benefit whenever
a claim is made under the mediclaim policy.
16. It was submitted that for an insurer to repudiate the policy it
must establish suppression or a misrepresentation of material facts on
the part of the insured vide Oriental Insurance Co Ltd. v. Mahendra
Construction - (2019) 18 SCC 209 and LIC of India v. Smt. G.M.
Channabasamma - (1991) 1 SCC 357. In order to repudiate the policy,
the insurance company was also required to prove the following:
(a)
That the heart attack suffered by the appellant on 19th May,
2009 was caused by diabetes mellitus-type II and
hyperlipidaemia,
(b)
That hyperlipidaemia was a "pre-existing condition,"
(c)
That this fact was known to the appellant and was
suppressed by him at the time of filling up the proposal form,
i.e. on 15th May, 2009.
17. Instead, respondent insurer only denied that the acute coronary
syndrome for which the complainant-appellant herein had to be treated
at the Medical Centre was a sudden and unexpected sickness. The
respondents, on the other hand, found that a past history of diabetes
mellitus and hyperlipidaemia were the main causes for the cardiovascular
ailment for which the insured was treated. In support of this stand, the
insurer filed only an affidavit of evidence of its panel doctor, Dr. P.R.
Purandare, which merely opined- "It is obvious that the insured was
suffering from diabetes mellitus and hyperlipidaemia. Also, he was
taking medications for the same."
18. There was no evidence let in by the respondents to show that
the pre-existing condition of diabetes mellitus- type II was the cause for
the heart attack suffered by the appellant on 19th May, 2009 or that the
appellant had any pre-existing heart related illness, disease or condition.
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19. It was further urged that the appellant had filed discharge
summary notes of the doctors at the Medical Centre where he was
treated for the period between 19th May, 2009 and 24th May, 2009 and a
perusal of the said documents would indicate that the appellant was
"without prior coronary history." That from the discharge summary notes
per se, there can be no proof of the appellant suffering from
hyperlipidaemia as on 15th May, 2009 when he filled the proposal form
or that the same was a pre-existing condition. That in fact, the discharge
summary indicated the "discharge diagnosis" given to the appellant on
24th May, 2009 which only mentioned:
(a) Acute anterior wall myocardial infraction with congestive heart,
(b) Diabetes-type II.
20. That the respondent failed to prove that the heart attack suffered
by the appellant on 19th May, 2009 was caused by diabetes mellitustype II and hyperlipidaemia. That appellant had disclosed that he was a
diabetic and was on medication and the tests done for the same showed
good results. It was submitted that the respondent further failed to prove
that the appellant was suffering from hyperlipidaemia at the time of
filling the proposal form and had made a false representation and
suppressed material facts.
21. Referring to the specific terms of the insurance policy, it was
contented by the learned Senior Counsel for appellant that an insurance
policy should be given a purposive interpretation in favour of the insuredappellant herein. The insurance policy and its components must be read
as a whole and given a meaning which furthers the expectations of
parties and also of the realities of the insurance business vide Canara
Bank v. United India Insurance Co. - (2020) 3 SCC 455. Further,
the exemption of liability clauses in insurance contracts are to be
construed contra proferentem, in favour of the insured in case of
ambiguity vide Sushilaben Indravadan Gandhi v. New India
Assurance Co. Ltd. - (2021) 7 SCC 151. Reliance was also placed on
Hari Om Agarwal v. Oriental Insurance Co.