Assurance Co.Ltd. Vs. Satpal Singh Muchal  INSC 527 (16 March 2009)
SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 1616 OF
2009 (Arising out of SLP (C) No.16445 of 2006) New India Assurance Co. Ltd. ..Appellant
Versus Satpal Singh Muchal ..Respondent
ARIJIT PASAYAT, J.
Challenge in this appeal is to the order passed by the National
Consumer Disputes Redressal Commission (hereinafter referred to as the
`National Commission') dismissing the revision petition filed by the appellant.
Order passed by the State Commission, Madhya Pradesh was under challenge before
the National Commission. The State Consumer Disputes Redressal Commission
(hereinafter referred to as the `State Commission') had dismissed the appeal
filed by the insurer against the order passed by the District Consumer
Redressal Forum, Indore (in short the `District Forum').
Background facts as projected by the appellant are as follows:
took a Medi-claim policy in the month of January, 1999.
policy was renewed lastly on 22.1.2002 for a period of one year i.e. till
21.1.2003. Respondent was suffering from kidney trouble and intimated the same
to the Divisional office of the appellant No.1-company. On receiving the
intimation that the respondent was suffering from kidney trouble, insurer
terminated the policy by letter dated 18.6.2003 with effect from 17.2.2002 by
placing reliance on clause 5.9. of the policy. Respondent issued notice to the
appellant calling upon them to treat the policy of insurance as subsisting and
to bear the expenses of the treatment of the respondent.
notice was issued on 2.7.2002 calling upon the appellant to pay the 2 claim of
the respondent. Appellant replied to the notice. Again respondent issued notice
to the appellant stating that he was suffering from kidney trouble for about
last two years. The appellant was of the view that there was concealment of the
fact of the pre existing disease at the time of taking the policy of the
insurance. It was clear that the insurance cover was taken by concealment of
material facts and, therefore, the insurance policy was terminated and the
respondent was intimated. The respondent was refunded pro rata premium of
Rs.2782/- by cheque dated 6.8.2002. Respondent submitted an application for
renewal of the policy. The respondent was intimated by letter dated 11.3.2003
that because of pre-existing disease and adverse claim ratio, the policy of
insurance has been cancelled and therefore the request of renewal cannot be
considered. Respondent filed a complaint before the District Forum. Stand of
the appellant before the District Forum was that every policy whether it is a
renewal or a fresh one is purely based on a contract. Since the respondent was
suffering from kidney trouble even prior to the taking of the first policy,
there was concealment of material particulars. In four years the respondent had
been paid as claimed amount of Rs.95,925/- as against the premium of
Rs.17,182/- and even in the year 2003-04 a sum of Rs.49,894/- was paid which
indicated adverse claim experience and as such in terms of clause 5.9 of the
policy, the same had 3 been rightly cancelled. The District Forum directed
revalidation of the policy and also directed consideration of the claim of the
Against the said order an appeal was preferred before the State
Commission which as noted above, dismissed the same. Revision was carried
before the National Commission which dismissed the same.
In support of the appeal learned counsel for the appellant
submitted that the National Commission did not consider the relevant aspects.
The fact of concealment had not been considered as also the scope and the
relevance of clause 5.9 has been totally overlooked.
Learned counsel for the respondent on the other hand supported the
Clause 5.9 reads as follows:
policy may be renewed by mutual consent. The company shall not however be bound
to give notice that it is due for renewal and the company may at any time cancel
this policy by sending the insured 30 days notice by registered letter at the
insured's last address and in such event the company shall refund to the
insured a pro rate premium for un expired period of insurance."
The basic stand of the appellant was that there was concealment of
the factum of ailment to the kidney when the first application for insurance
cover was made. Additionally the effect of clause 5.9 has not been considered.
Reference was made by learned counsel for the appellant to the
letter of the respondent dated 24.6.2009 which inter alia containS the
client has been suffering from kidney trouble since last 2 years i.e. during
the pendency of the Medi claim policy and claim was already submitted. Now in
order to thwart Mediclaim, the insurance Co. cannot cancel the policy and the
Insurance Co. is bound to pay the mediclaim of my client.
has been suffering vehemently and is undergoing vehemental trouble and agony.
Your said notice has told on the nerves of my client and he has become
despondent from his life.
intention of the said Ruces is not to defeat at the Medi claim of the insured.
Since my client has been suffering from kidney trouble during the recurrence of
the Insurance policy, in Insurance Company is bound to make payment, of the
Medi claim submitted by my client."
It appears that the District Forum, the State Commission and the
National Commission have not considered the effect of clause 5.9 and the
admissions made by the respondent in his letter as quoted above.
That being so, we remit the matter to District Forum to consider
the matter afresh, taking into account the consequences flowing from the factum
of concealment and the applicability of clause 5.9 to the facts of the case.
The appeal is allowed, but there shall be no order as to costs.
................................................J. (Dr. ARIJIT