OM PRAKASH AHUJA versus RELIANCE GENERAL INSURANCE CO. LTD. ETC. on 4 July 2023

[2023] 10 S.C.R. 83 : 2023 INSC 598

OM PRAKASH AHUJA

v.

RELIANCE GENERAL INSURANCE CO. LTD. ETC.(Civil Appeal Nos. 2769-2770 of 2023)

JULY 04, 2023

[ABHAY S. OKA AND RAJESH BINDAL, JJ.]

Consumer Protection Act, 1986: Insurance claim –Repudiation of – Denial of renewal of policy – On facts, pursuanceto the health insurance policy, the claimant incurred expenses onthe treatment of his wife for ovarian cancer – Claim forreimbursement of expenses made to the respondent-Insurancecompany, however, the same was repudiated on the ground of non-disclosure by the claimant that his wife was suffering from arheumatic heart disease – Filing of complaint – Allowed by theDistrict Forum and issuance of direction for renewal of the healthinsurance policy upon payment of premium – Upheld by the StateCommission – However, the National Commission though upheldthe directions as regards reimbursement of expenses incurredhowever, set aside the direction for renewal of the health insurancepolicy – Meanwhile, the claimant sought renewal of policy from07.07.2009, but the same was denied by the respondent on the groundof concealment of material facts – However, for the said period, policyrenewed in the year 2011 – Thereafter, for the period 2009 till 2011,claimant sought reimbursement of expenses incurred for the wife’streatment, however, the same was not allowed – In revision petition,the National Commission held that once the renewal of the policybeyond 06.07.2009 was not proper, no claim was admissible – Onappeal, held: Even the Insurance Company accepted the fact thatnon-mentioning of the disease from which the wife of the claimantsuffered at the time of purchasing the policy was not material, as thedeath was caused from a different disease all together – Both had norelation with each other – Insurance company cannot be permitted toraise same plea to deny renewal of insurance policy to the claimantfor the period from 07.07.2009 onwards – Moreover, the amountof premium charged by the insurance company for renewal ofpolicies has not been refunded – Meaning thereby the premium forrenewal of the policies for the said period stands paid – Once there

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Ais a valid insurance policy available in favour of the claimant, theclaim made by him for reimbursement of the expenses is justifiableand is to be paid to him – Thus, the impugned order passed by theNational Commission set aside.

Allowing the appeals, the CourtB

Conclusion

HELD : 1. The ground on which renewal of insurance policyto the appellant is sought to be refused is that while taking theinitial policy, the appellant had failed to disclose that his wife (nowdeceased) was suffering from rheumatic heart disease. Thoughshe expired of cancer. The fact remains that the first policy wasCtaken by the appellant for the period from 07.07.2007 to06.07.2008, which was renewed for another year. The claims evenfor the period, wherein valid policy was available with theappellant, were repudiated. Renewal of policy beyond 07.07.2009onwards was refused relying upon the guidelines issued by theInsurance Regulatory and Development Authority videDcommunication dated March 31, 2009. The claim of the appellantwas repudiated on that very ground namely non–disclosure ofthe disease by which the wife of the appellant (now deceased)suffered at the time of purchase of initial policy. The repudiationof claim by the insurance company was subject matter ofEconsideration before the Fora at different levels under theConsumer Protection Act, 1986. The rejection of the claim onthe ground that there was concealment of certain material factsby the appellant at the time of purchase of policy, was not foundto be tenable and the insurance company was directed toreimburse the expenses incurred for the period from 07.07.2007Fto 06.07.2009. The said amount was paid by the insurancecompany. The order passed by the National Commission was notchallenged any further by the Insurance Company. From this, itis established that even the Insurance Company accepted thefact that non–mentioning of the disease from which the deceasedGwife of the appellant suffered at the time of purchasing the policywas not material, as the death was caused from a different diseaseall together. Both had no relation with each other. Now, theinsurance company cannot be permitted to raise same plea todeny renewal of insurance policy to the appellant for the periodfrom 07.07.2009 onwards. Even though direction was given byH

OM PRAKASH AHUJA v. RELIANCE GENERAL INSURANCECO. LTD. ETC.

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the District Forum vide order dated 11.09.2009 to renew the policyfurther but it was not renewed, till such time interim order waspassed by the National Commission on 13.05.2011. [Para 26][93-B-G]

1.2 The impugned order was passed by the NationalCommission whereby direction for renewal of policies was setaside. The amount of premium charged by the insurance companyfor renewal of policies has not been refunded. Meaning therebythe premium for renewal of the policies for the period in disputestands paid. [Para 27][93-H; 94-A]

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1.3 The impugned order passed by the NationalCommission is set aside. The orders passed by the District Forumand State Forum regarding direction to the Insurance Companyto renew the policies are restored. Further, once there is a validinsurance policy available in favour of the appellant, the claimmade by him for reimbursement of the expenses incurred isjustifiable and deserves to be paid to him. [Para 29][94-D-E]

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Sulbha Prakash Motegaonkar v. LIC 2015 SCC OnlineSC 1880; Satwant Kaur Sandhu v. New IndiaAssurance Company Limited (2009) 8 SCC 316 : [2009]10 SCR 560; Reliance Life Insurance Company Limitedand Another v. Rekhaben Nareshbhai Rathod (2019) 6SCC 175 : [2019] 6 SCR 733; Oriental InsuranceCompany Limited v. Mahendra Construction (2019) 18SCC 209 – referred to.

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Case Law Reference

(CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2769-2770 of 2023)

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From the Judgment and Order dated 26.11.2018 of the NationalConsumer Disputes Redressal Commission, New Delhi in RP Nos. 923of 2011 and RP No. 1417 of 2014.

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AMs. Suruchi Aggarwal, Sr. Adv., Mohit Kumar Singh, PankajKumar Mishra, Manish Kumar Vikkey, Advs. for the Appellant.

Navneet Kumar, Saurabh Tiwari, Parijat Kishore, Advs. for theRespondents.

The Judgment of the Court was delivered byBRAJESH BINDAL, J.

1. Common order dated 26.11.2018 passed by the NationalConsumer Disputes Redressal Commission (for short, “the NationalCommission”) in Revision Petition Nos. 923 of 2011 and 1417 of 2014 isCunder challenge before this Court. We deem it appropriate to notice thefacts separately, before we deal with the arguments.

2. This petition was filed by the respondent Insurance Companybefore the National Commission challenging order dated 23.12.2010Dpassed by Haryana State Consumer Disputes Redressal Commission(for short “the State Commission”) in Appeal No. 1792/09. It was anappeal against an order dated 11.9.2009 passed by the District ConsumerDisputes Redressal Forum, Karnal (for short “the District Forum”), in acomplaint filed by Om Prakash Ahuja, the appellant. The grievance raisedby the appellant in the complaint was that the expenses incurred by himEon treatment of his wife for ovarian cancer were not reimbursed by therespondent, Reliance General Insurance Ltd. (hereinafter referred to as“the insurance company”). It was pleaded that the health insurance policywas taken by the appellant for the family, which was valid from 7.7.2007to 6.7.2008. The coverage was for 2 lakhs against any health problemFand 4 lakhs in case of critical illness. The policy was further renewedup to 6.7.2009. The deceased wife of the appellant was diagnosed to besuffering from ovarian cancer. She was treated in various hospitals from19.1.2008 to 23.8.2008. Claim of 91,496 was lodged for treatment from19.1.2008 to 11.3.2008 and 4,14,464 for the period from 13.3.2008 to19.9.2008. The claim was repudiated by the insurance company videGletters dated 1.10.2008 and 8.12.2008, respectively on the ground thatthe appellant’s wife was suffering from rheumatic heart disease and thesame was not disclosed in the proposal form. The complaint was filedbefore the District Forum. Vide order dated 11.09.2009 the District Forumdirected the insurance company to reimburse the expenses incurred byHthe appellant on treatment of his wife along with interest @ 8% p.a.

Further, refusal to renew insurance policy was found to be arbitrary.Direction was issued for renewal of the health insurance policy uponpayment of premium.

3. The appeal filed by the insurance company against the orderpassed by District Forum was dismissed by the State Commission videorder dated 23.12.2010.

4. While entertaining the revision petition filed by the InsuranceCompany against the order passed by the State Commission, the NationalCommission vide interim order dated 13.5.2011 directed that the renewalof insurance policy shall be subject to its final decision. Vide order dated26.11.2018,the National Commission upheld the directions of the StateCommission to the extent of reimbursement of expenses incurred on thetreatment of the deceased wife of the appellant, however, the directionfor renewal of the health insurance policy was set aside.

5. This revision petition was filed by the Insurance Companybefore the National Commission against the order passed by the StateCommission in Appeal No. 689/2013 decided on 2.12.2013, whereby theState Commission upheld the order dated 1.8.2013 passed by the DistrictForum in a complaint filed by the appellant. It was pleaded in the complaintthat the appellant had initially purchased a health insurance policy forthe family which was valid from 7.7.2007 to 6.7.2008 and it wassubsequently renewed up to 6.7.2009.The said policy was renewed inOctober 2011 for the period from 7.7.2009 to 6.7.2010 on payment ofpremium of 6105 and for the period from 7.7.2010 to 6.7.2011 onpayment of 30,560 and for the period from 7.7.2011 to 6.7.2012 onpayment of 30,560. As the complainant had spent a sum of 3,23,486.50during the period from 11.11.2009 to 11.6.2010, 2,31,307.34during theperiod from 2.8.2010 to 6.6.2011, 1,18,511.50 for the period 27.6.2011to 30.9.2011 and 74,332.80 during the period from 27.9.2011 to28.10.2011 on treatment of his wife, claim was lodged with the insurancecompany. The claims having not been accepted, a complaint was filed.The stand taken by the insurance company before the District Forumwas that the renewal of the policy was in terms of the order passed bythe District Forum in the earlier complaint filed by the appellant asconfirmed by the State Commission. However, the same was the subjectmatter of challenge before the National Commission. Hence, no claim AB

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Awas admissible on that basis. However, finally the District Forum directedfor reimbursement of 7,47,638.19 along with interest @ 9% p.a. Besidesthis, a sum of 20,000 was awarded for harassment and 5,000 towardslitigation expenses.

6. The appeal filed by the insurance company before the StateBCommission was dismissed vide order dated 2.12.2013.

7. The National Commission, vide impugned order allowed theRevision Petition No. 1417/2014 holding that once renewal of the policybeyond 6.7.2009 was not proper, no claim was admissible.

ARGUMENTSC

8. Learned counsel for the appellant submitted that it is a case inwhich the appellant had got the health insurance policy for the family.Once expenses had been incurred on the treatment of his wife, the samewere required to be reimbursed by the insurance company. There is nodispute raised as expenses were actually incurred. The wife of theDappellant unfortunately expired. Though the direction was issued by theDistrict Forum, as upheld up to the National Commission, the expensesincurred during the period 7.7.2007 to 6.7.2009 were directed to be paidto the appellant considering the fact that the concealment of rheumaticheart disease had no relation with ovarian cancer. Reliance was placedEon order passed by this Court in Sulbha Prakash Motegaonkar v. LIC[1].However, for the period subsequent to 6.7.2009, the claim was notaccepted by the insurance company. On a complaint filed by the appellant,a direction was issued by the District Forum to the insurance companyto reimburse the expenses incurred on the treatment. The order wasupheld by the State Commission. However, the National CommissionFhas erroneously set aside that order holding that the renewal of policywas not proper. No doubt, the health insurance policy was renewed on adirection issued by the District Forum, as upheld by the State Commission.However, non-renewal of a policy by the insurance company has certainlydeprived the appellant from taking the policy from any other company.GAt this stage, it would be unreasonable to deprive the appellant of thefruits of the policy in the form of claim, despite the fact that more thanthe normal premium was charged by the insurance company at the timeof renewal as extra risk was covered.

9. On the other hand, learned counsel for the insurance companysubmitted that no benefit could accrue to the appellant in terms of anorder passed by the Commission, which was ultimately set aside. Initiallythe appellant had got the policy from 7.7.2007 to 6.7.2008, which wasrenewed upto 6.7.2009. There was some issue with reference to theclaim for expenses incurred by the appellant for treatment of his wife asthe disease from which she was suffering at the time of purchasing thepolicy, was not disclosed. Still in a complaint filed by the appellant,direction was issued for reimbursement of the expenses incurred by theappellant. As the direction was upheld up to the National Commission,the insurance company has not challenged the same. Even though theremay be dispute regarding the quantum of expenses incurred.

10. There is no error in the order passed by the NationalCommission whereby it has held that renewal of policy from 7.7.2009onwards is not proper. In fact, the last policy of the appellant expired on6.7.2009 and thereafter there was no renewal of the policy as theinsurance company had refused to renew the same. It was in terms ofthe order passed by the District Forum on 11.9.2009 as upheld by theState Commission by order dated 23.12.2010 and the interim order passedby the National Commission on 13.5.2011 that the insurance policy from7.7.2009 to 6.7.2012 was renewed in October 2011. Interim order passedby the National Commission specifically stated that the renewal will besubject to the final decision and finally the National Commission heldthat the direction issued by the State Commission for renewal of thepolicy was not proper.

11. Issuance of insurance policy is a contract. The insurancecompany cannot be compelled to sell any policy. In fact, the refusal torenew the policy was in terms of the guidelines issued down by theInsurance Regulatory and Development Authority dated March 31,2009.The appellant cannot compel the insurance company to violate thoseguidelines. In terms of the aforesaid guidelines, renewal of an insurancepolicy can be refused on the ground of fraud, moral hazard ormisrepresentation. It is a case in which at the time of purchasing thefirst policy, the appellant had concealed the factum of illness beingsuffered by his wife as a result of which the claim for treatment wasmade. Though that amount is not being disputed by the appellant, however,the claim made for the period during which the policy was renewed interms of interim order passed by the National Commission will not be AB

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Aadmissible to the appellant. He further submitted that reliance on theorder passed by this Court in Sulbha Prakash Motegaonkar’s case(supra)is totally misplaced. In the aforesaid order, the earlier bindingprecedents of this Court in Satwant Kaur Sandhu v. New IndiaAssurance Company Limited[2], Reliance Life Insurance CompanyLimited and Another v. Rekhaben Nareshbhai Rathod[3] and OrientalBInsurance Company Limited v. Mahendra Construction[4], were notconsidered.

DISCUSSION

12. Heard learned counsel for the parties and perused the relevantCreferred records.

13. As per the facts available, in the complaint No. 50 filed by theappellant before the District Forum, the wife of the appellant was detectedsuffering from Cancer of Ovary. She was treated in various hospitalsfrom 19.01.2008 onwards. She remained hospitalised from 19.01.2008Dto 23.08.2008. A claim of 91,416 was submitted for the expensesincurred for treatment from 19.01.2008 to 11.03.2008. A further claimof 4,14,464.76 was submitted for treatment from 13.03.2008 to19.09.2008. The aforesaid claims were repudiated by the insurancecompany vide letters dated 01.10.2008 and 08.12.2008, respectively.Challenging the rejection of the claim, a complaint was filed before theEDistrict Forum.

14. The District Forum vide order dated 11.09.2009 accepted thecomplaint. The communications of the insurance company repudiatingthe claims were set aside, while holding that there was no relation of thedisease suffered by the wife of the appellant with the disease for whichFtreatment was taken. The action of insurance company in refusing furtherrenewal of the policy was also held to be bad. Accordingly, the directionwas issued to renew the policies from the date these expired on paymentof renewal charges.

15. The aforesaid order was challenged by the insurance companyGbefore the State Commission. However, the said appeal was dismissed.The State Commission observed that even at the time of the first renewalof the policy from 07.07.2008 to 06.07.2009, the insurance company 2 (2009) 8 SCC 316.3 (2019) 6 SCC 175.H4 (2019) 18 SCC 209.

was well aware of the treatment which the wife of the appellant wasundergoing, for which the claim had already been submitted. The orderdated 23.12.2010 passed by the State Commission was challenged bythe insurance company before the National Commission.

16. Vide interim order dated 13.05.2011, the National Commissiondirected that the renewal of policy in terms of the direction issued by theDistrict Forum, as upheld by the State Commission, shall be subject tofinal decision in the Revision Petition No.923 of 2011. The challenge bythe insurance company before the National Commission was only to thedirection issued by the lower authorities for renewal of the policy from07.07.2009 onwards, otherwise the amount spent by the appellant fortreatment as claimed in the complaint was not disputed and was dulypaid.

17. In terms of the interim order passed by the NationalCommission, the insurance policy was renewed for the period from07.07.2009 to 06.07.2010 on payment of a premium of 6,105. Policywas further renewed for the period from 07.07.2010 to 06.07.2011 andfrom 07.07.2011 to 06.07.2012, on payment of annual premium of 30,560.The fact remains that the sum insured remained the same from the verybeginning i.e., two lakhs and four lakhs in case of critical illness. Thepolicy from 07.07.2009 onwards was renewed in October 2011.

18. A complaint bearing number 249 of 2012 was filed by theappellant seeking reimbursement of the amount spent by the appellanton the treatment of his wife of 3,23,486.50 for the period from 11.11.2009to 11.06.2010, 2,31,307.34 for the period from 02.08.2010 to 06.06.2011,1,18,511.50 for the period from 27.06.2011 to 30.09.2011 and 74,332.80for the period from 27.09.2011 to 28.10.2011. The claim was submittedby the Appellant on 14.10.2011 which was repudiated vide letter dated31.01.2012, after which the complaint was filed. The reason assignedwas that the renewal of insurance policies for the period in question wassub judice before the National Commission.

19. The District Forum accepted the complaint vide order dated01.08.2013 and directed reimbursement of expenses incurred by theappellant. The State Commission in an appeal filed by the insurancecompany upheld the order passed by the District Forum.

20. The aforesaid order was also challenged by the insurancecompany before the National Commission by filing Revision Petition A

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ANo. 1417 of 2014. The National Commission decided both the Revisionpetitions vide a common order.

21. There is a letter dated 10.03.2008 on record from the appellantto respondent no.2 namely Paramount Health Services Private Limited,who is the agent of the insurance company. The letter clearly suggestsBthat the claim had been lodged and allotted number 2771734. It wasthereafter that the policy for the next year was renewed on 07.07.2008.

22. There was no clear answer given by learned Counsel for therespondent insurance company regarding the submission of the claimmade by the appellant with its agent on 10.03.2008 which was evenCallotted a claim number 2771734. All what was sought to be explainedwas that it was in process and may not be in the notice of the departmentrenewing the policy from 07.07.2008 till 06.07.2009.

23. The National Commission in Revision Petition 923 of 2011 setaside the direction issued by the lower authorities for renewal of theDpolicies beyond 06.07.2009, as it was noticed that there was concealmentof facts by the appellant at the time of purchase of the policy withreference to the disease already suffered by his wife i.e., rheumaticheart disease. Once the policies for the period from 07.07.2009 onwardsare not renewed, the claim for reimbursement of expenses incurred ontreatment was also rejected while setting aside the orders passed by theElower authorities.

24. A certificate dated June 30, 2009, issued by Rajiv Gandhi CancerInstitute and Research Centre, New Delhi has been placed on recordgiving the details of the treatment given to the wife of the appellant, whowas a registered patient with the hospital since 13.03.2008 and prior toFthat she had undergone surgery on 31.01.2008 at AIIMS. The certificatefurther mentions that rheumatic heart disease and carcinoma ovary arenot related to each other.

25. The main thrust of the argument of learned Counsel for theinsurance company is that in terms of the guidelines issued by theGInsurance Regulatory and Development Authority on 31.03.2009regarding renewal of health insurance policies, the renewal of policy tothe appellant could be refused. The relevant clause is extracted belowfrom the IRDA letter dated 31[st] March, 2009.

“A health insurance policy shall be ordinarily renewableHexcept on grounds such as fraud, moral hazard, or misrepresentation and upon renewal being sought by theinsured, shall not be rejected on arbitrary grounds.Specifically, renewal shall not be denied on the ground thatthe insured had made a claim (or claims) in the previous orearlier years.”

26. The ground on which renewal of insurance policy to theappellant is sought to be refused is that while taking the initial policy, theappellant had failed to disclose that his wife (now deceased) was sufferingfrom rheumatic heart disease. Though she expired of cancer. The factremains that the first policy was taken by the appellant for the periodfrom07.07.2007 to 06.07.2008, which was renewed for another year.The claims even for the period, wherein valid policy was available withthe appellant, were repudiated. Renewal of policy beyond 07.07.2009onwards was refused relying upon the guidelines issued by the InsuranceRegulatory and Development Authority vide communication dated March31, 2009. The claim of the appellant was repudiated on that very groundnamely non-disclosure of the disease by which the wife of the appellant(now deceased) suffered at the time of purchase of initial policy. Therepudiation of claim by the insurance company was subject matter ofconsideration before the Fora at different levels under the ConsumerProtection Act, 1986. The rejection of the claim on the ground that therewas concealment of certain material facts by the appellant at the time ofpurchase of policy, was not found to be tenable and the insurance companywas directed to reimburse the expenses incurred for the period from07.07.2007 to 06.07.2009.The aforesaid amount was paid by the insurancecompany. The order passed by the National Commission was notchallenged any further by the Insurance Company.From this, it isestablished that even the Insurance Company accepted the fact thatnon-mentioning of the disease from which the deceased wife of theappellant suffered at the time of purchasing the policy was not material,as the death was caused from a different disease all together. Both hadno relation with each other. Now, the insurance company cannot bepermitted to raise same plea to deny renewal of insurance policy to theappellant for the period from 07.07.2009 onwards. Even though directionwas given by the District Forum vide order dated 11.09.2009 to renewthe policy further but it was not renewed, till such time interim order waspassed by the National Commission on 13.05.2011.

27. Further the impugned order was passed by the NationalCommission on 26.11.2018, whereby direction for renewal of policies A

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Awas set aside. The amount of premium charged by the insurance companyfor renewal of policies has not been refunded. Meaning thereby thepremium for renewal of the policies for the period in dispute stands paid.

28. The judgments of this Court relied upon by the insurancecompany in the case of Satwant Kaur Sandhu vs. New IndiaBAssurance Company Limited[5]; Reliance Life Insurance CompanyLimited vs. Rekhaben Nareshbhai Rathod[6] and Oriental Insurance Company Limited vs. Mahendra Construction[7] will not come to itsrescue for the reason that in the aforesaid cases, the issue underconsideration was whether the repudiation of the claim by the insurancecompany on the ground of concealment of fact at the time of purchaseCof policy was valid or not. It was with reference to the period duringwhich the policy was valid. Examining the facts of the above-mentionedcases, this Court opined that the repudiation of claim was legallysustainable. In the case in hand repudiation of claim was set aside &order was accepted by the Insurance Company.

D29. For the reasons mentioned above, the appeals are allowed.The impugned order passed by the National Commission is set aside.The orders passed by the District Forum and State Forum regardingdirection to the Insurance Company to renew the policies are restored.Further, once there is a valid insurance policy available in favour of theEappellant, the claim made by him for reimbursement of the expensesincurred is justifiable and deserves to be paid to him. Ordered accordingly.There shall be no order as to costs.

Nidhi Jain

(Assisted by : Tamana, LCRA)F

Appeals allowed.

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5 (2009) 8 SCC 316.

6 (2019) 6 SCC 175.

7 (2019) 18 SCC 209.