Date of Judgment: 1st July, 2026
Delivered by : Kallol Chattopadhyay, President, DCDRC, Kolkata Unit-I
J U D G M E N T
I. Nature of the Complaint
This is an application filed by the complainants under Section 35 of the Consumer Protection Act, 2019, alleging deficiency in service and unfair trade practice against the Opposite Parties in connection with a health insurance policy.
II. Case of the Complainants
The complainant No. 1, Sanjay Talwar, is a senior citizen residing within the jurisdiction of this Commission, and the complainant No. 2, Meenu Talwar, is his wife. The Opposite Party Nos. 1 and 2 are the insurance company, Manipal Cigna Health Insurance Company Limited, having its local and head offices at the places mentioned in the cause title. Opposite Party No. 3 is the Bank of Maharashtra, which acted as the organiser of a group health insurance policy for its account holders. Opposite Party No. 4 is an officer of Opposite Party Nos. 1 and 2, who used to operate the business of the insurance company from the premises of Opposite Party No. 3. The complainants' case is that they held a health insurance policy with The Oriental Insurance Company Limited since 23.07.2015, which continued till 24.07.2018. Sometime in February, 2018, while this earlier policy was still subsisting, the Branch Manager of Opposite Party No. 3 introduced the complainant No. 1 to Opposite Party No. 4 for the purpose of purchasing a new health insurance policy from Opposite Party Nos. 1 and 2. On the assurance that the existing policy could be ported to a new one, the complainant No. 1 agreed, and completed all formalities for porting on 23.03.2018. At the time of porting, the complainants state they disclosed all necessary particulars but did not disclose any diabetes-related health condition, since the complainant No. 1 was not suffering from diabetes at any point of time. Accordingly, Opposite Party No. 1 issued a policy bearing No. 100200018882/00/00 on 23.03.2018, valid till 22.03.2019, against payment of premium of Rs. 29,631/- (Rupees Twenty Nine Thousand Six Hundred Thirty One) only. The policy was subsequently renewed for a further period up to 22.03.2020.
On 18.06.2019, the complainant No. 1 was admitted at The Mission Hospital, Durgapur, for treatment of Liver Abscess, and remained admitted till 28.06.2019, incurring an expense of Rs. 2,75,000/- (Rupees Two Lakhs Seventy Five Thousand) only. The complainant thereafter submitted a claim for reimbursement to Opposite Party No. 1, but instead of paying the claim, Opposite Party No. 1 repudiated the entire claim and cancelled the policy on the ground of suppression of Diabetes Mellitus Type 2.
The complainants assert that the ailment for which the complainant No. 1 was hospitalised i.e., Liver Abscess is not in any way related to or a complication of diabetes, and that the complainant never suffered any diabetes-related complication between 2012 and 2019. It is stated that only once, in the year 2014, Dr. Ashif Ali Ahmed had prescribed medicine for less than a
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month for a transient elevation in blood sugar, after which the complainant remained non-diabetic without any medication, a fact clarified in writing by the said doctor in his certificate dated
28.06.2019.
The complainant No. 2 also had to be hospitalised during the COVID period, initially at Apollo Gleneagles Hospital (from where she was discharged on 19.06.2020) and thereafter at The Mission Hospital, Durgapur, where she underwent open heart surgery for Myxoma and was discharged on 10.08.2020. She incurred an expenditure of Rs. 5,40,789/- (Rupees Five Lakhs Forty Thousand Seven Hundred Eighty Nine) only for this treatment. The total medical expenditure of both complainants during the policy period is stated to be Rs. 8,15,789/- (Rupees Eight Lakhs Fifteen Thousand Seven Hundred Eighty Nine) only. Treating themselves as consumers within the meaning of the Consumer Protection Act, 2019, the complainants allege deficiency in service and unfair trade practice on the part of Opposite Party Nos. 1 and 2 in repudiating the claim and cancelling the policy, and pray for an order directing Opposite Party Nos. 1 and 2 to pay the said sum of Rs. 8,15,789/- together with compensation and litigation costs, as well as a further sum of Rs. 2,00,000/- (Rupees Two Lakhs) only towards post-operative expenses, along with a direction to issue a new health insurance policy with continuous effect and all benefits.
III. Written Version of Opposite Party Nos. 1 and 2
Opposite Party Nos. 1 and 2, in their written version, raised a preliminary objection that the complaint involves complicated questions of fact and law and that only a competent civil court can adjudicate the matter. They further stated that the policy obtained by the complainants was a 'Master Policy' and was not, in their submission, a porting of the earlier Oriental Insurance policy. It is stated that the policy was issued for the period 23.03.2018 to 22.03.2019 and subsequently extended to 22.03.2020 under the ProHealth Group Insurance Policy, Family Floater type, with a stated sum insured.
It is the case of Opposite Party Nos. 1 and 2 that the Master Policy was designed for customers of the bank without medical underwriting, on the basis that the proposer discloses no adverse medical history; and that had the complainant disclosed his actual medical condition, the proposal would have been rejected outright. It is contended that upon scrutiny of the documents filed by the complainant for reimbursement of his hospitalisation expenses at The Mission Hospital, Durgapur (18.06.2019 to 28.06.2019), it was revealed that the insured was a known case of Diabetes Mellitus Type 2 since 2014, a fact not disclosed in the proposal form/enrolment form at the time of inception of the policy. The claim was accordingly denied under policy condition VI.1, the Duty of Disclosure clause.
It is further contended that since the policy had already been terminated by Opposite Party No. 1 prior to the hospitalisation of the complainant No. 2 at Apollo Gleneagles Hospital (15.06.2020 to 19.06.2020), that treatment, and its reimbursement, cannot fall within the coverage of the policy. On this basis, Opposite Party Nos. 1 and 2 have prayed for dismissal of the complaint with costs.
IV. Written Version of Opposite Party No. 3
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Opposite Party No. 3, Bank of Maharashtra, also entered appearance and contested the case by filing a separate written version. It is submitted that the policy availed by the complainants was provided by Opposite Party Nos. 1 and 2, and that the premium for the policy was received by Opposite Party Nos. 1 and 2 alone; Opposite Party No. 3 was therefore in no way related to this proceeding. It is further contended that Opposite Party No. 3 had only introduced the complainants to Opposite Party No. 4, the authorised agent of Opposite Party Nos. 1 and 2, in the ordinary course as is done for other customers of the bank, and that the decision to avail the policy was made entirely by the complainants themselves. It is also pointed out that no specific allegation has been made against Opposite Party No. 3 in the complaint and no relief has been claimed against it, and on this basis Opposite Party No. 3 has prayed for dismissal of the case against it with costs.
V. Position of Opposite Party No. 4
Opposite Party No. 4, the officer/agent of Opposite Party Nos. 1 and 2 who was stationed at the premises of Opposite Party No. 3, did not appear and did not file any written version despite service, and the case proceeded against Opposite Party No. 4 ex parte. Any act or omission of Opposite Party No. 4 in the course of soliciting or procuring the policy is, in law, attributable to Opposite Party Nos. 1 and 2 as his principal.
VI. Points for Consideration
Having regard to the pleadings, the evidence on record, and the arguments advanced, the following points arise for consideration:
Point No. 1: Whether the repudiation of the reimbursement claim of the complainant No. 1 by Opposite Party Nos. 1 and 2 on the ground of non-disclosure of Diabetes Mellitus Type 2 is legally sustainable on the facts and evidence on record?
Point No. 2: Whether Clause VI.1 of the policy terms and conditions — the 'Duty of Disclosure' clause — relied upon by Opposite Party Nos. 1 and 2 to justify the repudiation and cancellation, is enforceable against the complainants, having regard to the manner in which the policy terms and conditions were made available to them?
Point No. 3: Whether the retrospective cancellation of the policy with effect from inception, with simultaneous forfeiture of premium, constitutes an unfair trade practice within the meaning of Section 2(47) of the Consumer Protection Act, 2019?
Point No. 4: Whether the complainants are entitled to reimbursement of the treatment expenses of the complainant No. 2 (Meenu Talwar) for the period during which the policy ought to have been subsisting?
Point No. 5: Whether any deficiency in service or unfair trade practice is made out against Opposite Party No. 3, Bank of Maharashtra?
Point No. 6: What relief, if any, are the complainants entitled to, and against whom?
VII. Evidence on Record
The complainant No. 1 adduced evidence on affidavit on behalf of both complainants, and
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also replied to the questionnaires filed by Opposite Party Nos. 1 and 2 and by Opposite Party No. 3, by way of separate affidavits. Opposite Party Nos. 1 and 2 adduced evidence on affidavit through their Manager-Legal, and replied to the complainant's questionnaire through their Assistant Vice President-Legal, both by way of sworn affidavits. Opposite Party No. 3 adduced evidence on affidavit through its Senior Manager and separately, through its Branch Manager, replied to the cross-examination questions put by the complainant.
Apart from the evidence on affidavit, the complainant has placed on record copies of the following documents: (i) policy documents of The Oriental Insurance Company Limited, evidencing the earlier policy held from 2015; (ii) the premium certificate and Certificate of Insurance issued by Opposite Party Nos. 1 and 2; (iii) the discharge summary of The Mission Hospital, Durgapur, in respect of the complainant No. 1's treatment for Liver Abscess; (iv) the discharge summary of The Mission Hospital, Durgapur, and of Apollo Gleneagles Hospital, in respect of the complainant No. 2's treatment; (v) the medical certificate issued by Dr. Md. Ashif Ali Ahmed dated 28.06.2019; (vi) blood sugar and HbA1c test reports of the complainant No. 1 spanning the years 2012 to 2019; and (vii) hospital bills evidencing the expenses incurred.
Opposite Party Nos. 1 and 2 have, for their part, produced: (i) the Enrolment Form filled up by the complainant No. 1 for the insurance policy; (ii) the Certificate of Insurance of the complainants; (iii) the policy Terms and Conditions booklet; (iv) the letter of repudiation dated 11.07.2019; (v) the letter of termination of the policy; (vi) the medical certificate dated 28.06.2019 of Dr. Md. Ashif Ali Ahmed; (vii) the consultation paper/prescription dated 25.02.2014 of the same doctor; and (viii) certain other medical papers of the complainant No. 1 relating to tests and treatment between 04.04.2017 and 17.06.2019. Opposite Party No. 3 did not produce any documents in support of its contentions.
VIII. Discussion and Decision on the Points for Consideration Point No. 1 — Sustainability of the repudiation:
On this point, the complainants in their brief notes of argument (BNA) and through their Ld. Counsel submitted that the repudiation is founded on a misreading of the treating doctor's certificate, that the ailment actually treated has no medical connection with diabetes, and that the insurer failed to act on the complainant's specific request for an independent pathological test to verify his diabetic status. Reliance is placed on Neelam Chopra v. Life Insurance Corporation of India (NCDRC), Hari Om Agarwal v. Oriental Insurance Co. Ltd . (Delhi HC), and Sulbha Prakash Motegaonkar v. Life Insurance Corporation of India (SC), for the proposition that non-disclosure of a lifestyle condition unconnected with the cause of claim will not justify repudiation. The ld. Counsel of Opposite Party Nos. 1 and 2, on the other hand, rests squarely on the consultation paper of 25.02.2014 and the certificate of 28.06.2019 as proof of a known, continuing diabetic condition, and submitted that this was a material fact whose disclosure would have led to outright rejection of the proposal.
The repudiation of the claim of the complainant No. 1 rests entirely on the assertion that he was a known case of Diabetes Mellitus Type 2 since 2014, a fact allegedly not disclosed at the time of taking the policy. To establish this, Opposite Party Nos. 1 and 2 relied on two documents from the same treating doctor, Dr. Md. Ashif Ali Ahmed, Senior Consultant Gastroenterologist and Hepatologist, The Mission Hospital, Durgapur, his consultation paper dated 25.02.2014, and his
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certificate dated 28.06.2019. The consultation paper of 25.02.2014 does record an assessment touching diabetes mellitus. However, the certificate of the very same doctor, dated 28.06.2019, when read as a whole, states that the complainant No. 1 'developed transient diabetes mellitus (DM) in the year of 2014 for which I prescribed medicine for very short duration (approx 1 month), since then he is euglycemic without any medication (Non diabetic without any medicine).' Opposite Party Nos. 1 and 2, in their reply to the complainant's cross-examination questions, took the position that this certificate is 'post facto' and was 'issued post denial of the claim', and is therefore of no value. This Commission does not accept that submission. The certificate is not from an independent or newly engaged doctor but it is from the very physician who recorded the 2014 finding relied upon by the insurer. He is best placed to explain what that finding meant in clinical terms, and his explanation that the condition was transient, resolved within a month, and that the complainant has since remained non-diabetic without medication, has not been rebutted by any contrary medical opinion from the insurer's side.
The complainant has further placed on record blood sugar and HbA1c reports spanning 2012 to 2019 including reports of 30.07.2012, 25.02.2014, 16.05.2016, 30.12.2016, 17.03.2017, and 30.01.2018 all of which show blood glucose and HbA1c values within the normal, non-diabetic range. The HbA1c reading of 30.01.2018, taken shortly before the policy was even applied for, was 5.2%, squarely within the normal range of below 6.0%.It has also been placed on record that on 25.02.2014 itself i.e., the very date of the prescription on which Opposite Party Nos. 1 and 2 founded the repudiation of the claim and the cancellation of the policy, the complainant No. 1's random Plasma Glucose test result was 100 mg/dl, which is well within the reference range of 60-140 mg/dl applicable to that test. These contemporaneous laboratory reports corroborate the treating doctor's clarification and have not been controverted by Opposite Party Nos. 1 and 2 by any document or expert opinion of their own.
Even assuming, for the sake of argument, that there was some transient elevation of blood sugar in 2014, this Commission finds that the ailment for which the complainant No. 1 was hospitalised in 2019 i.e., Left Lobe Liver Abscess (Amoebic) with sepsis, acute viral hepatitis, sub- acute appendicitis, and urinary tract infection has no medical correlation with diabetes. Liver abscess of amoebic origin is caused by parasitic infection and is unconnected to blood sugar levels. Where the alleged non-disclosure relates to a condition that bears no causal connection with the ailment actually claimed for, repudiation on that ground cannot be sustained. This principle finds support in the judgment relied upon by the complainants, namely the order of the Hon'ble National Consumer Disputes Redressal Commission in Neelam Chopra v. Life Insurance Corporation of India, Revision Petition No. 4461 of 2012, decided on 08.10.2018, which itself relies on the judgment of the Hon'ble High Court of Delhi in Hari Om Agarwal v. Oriental Insurance Co. Ltd ., W.P.(C) No. 656 of 2007, holding that lifestyle conditions such as diabetes are so common that an insurer cannot, by a textual application of a non- disclosure clause, reduce the policy to a contract with no real content.
For these reasons, this Commission holds that the repudiation of the claim of the complainant No. 1, dated 11.07.2019, is not sustainable on the facts and evidence on record. Point No. 1 is decided in favour of the complainants.
Point No. 2 — Enforceability of Clause VI.1:
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It would be useful, before recording a finding on this point, to set out the crux of the rival submissions made by the parties in their respective Brief Notes of Argument (BNA) and also through oral submission, since both sides have placed considerable reliance on case law and statutory provisions touching the question of disclosure.
Crux of the complainants' BNA: It is the complainants' case that the terms and conditions of the policy, including Clause VI.1, were never furnished to them at or before the time of taking the policy, and were disclosed to them for the first time only when the written version of Opposite Party Nos. 1 and 2 was filed before this Commission. It is submitted that a clause of such a drastic character enabling the insurer to void the contract from inception and forfeit the premium cannot be enforced against an insured who was never made aware of its existence or content. The complainants further submit that there was, in any event, no suppression of any health condition, since the complainant No. 1 was not, in substance, suffering from diabetes at the relevant time, a position supported by the treating doctor's own clarification and by contemporaneous blood sugar reports.
Crux of the BNA of Opposite Party Nos. 1 and 2: The insurer places heavy reliance on the principle of uberrima fides (utmost good faith), submitting that the proposer is bound to disclose all material facts regardless of whether he considers them material, and that any inaccurate or incomplete answer entitles the insurer to repudiate the claim. In support of this proposition, the insurer cites Satwant Kaur Sandhu v. New India Assurance Company Ltd., (2009) 8 SCC 316; Life Insurance Corporation of India v. Smt. Neelam Sharma (NCDRC); Shri Gulshan Rai Verma v. M/s Religare Health Insurance, Complaint No. 1264 of 2017 (SCDRC Delhi); Sgs India Ltd. (S) v. Dolphin International Ltd. (S)., LL 2021 SC 544 (on the complainant's burden to prove deficiency in service); Export Credit Guarantee Corpn. of India Ltd. v. M/s Garg Sons International (on strict construction of insurance contracts and the proposition that contra proferentem does not apply to commercial contracts); Bajaj Allianz General Insurance Co. Ltd. v. Rameshbhai Shivabhai Patel & Ors., Appeal No. 628/2014 (Gujarat State Commission); Aman Kapoor v. National Insurance Co. Ltd., Revision Petition No. 429/2017 (NCDRC); and Reliance Life Insurance Company v. Rekha Ben Naresh Bai Rathore, Civil Appeal No. 4261 of 2019 (SC), for the proposition that the relationship of insured and insurer is one where mutual obligations of trust and good faith are paramount, and that failure to disclose material information entitles the insurer to repudiate. Having considered the rival submissions, this Commission finds it necessary to examine, in turn, the legal effect of non-communication of policy terms upon enforceability of Clause VI.1, and thereafter to consider whether the authorities relied upon by Opposite Party Nos. 1 and 2 assist their case on the facts of the present matter or not.
In his reply to the cross-examination questions put by Opposite Party Nos. 1 and 2, the complainant No. 1 has categorically stated, on oath, that he 'was only provided with the policy bonds and no detail terms and condition was provided at the time of taking the policy', and that he 'was only aware [of] what was written on the policy bond,' and further that the terms and conditions were 'disclosed only with the WV [written version] of the OP'. This evidence has not been specifically and effectively rebutted by Opposite Party Nos. 1 and 2 in their reply or cross- examination of the complainant; no document evidencing actual delivery of the full terms and conditions booklet to the complainant at the time of issuance of the policy, nor any signed acknowledgment of receipt, has been produced.
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On this finding of fact, the law is well settled that an insurer cannot rely upon an exclusion clause to defeat a claim where that clause was not communicated to the insured. The Hon'ble Supreme Court in Bharat Watch Company v. National Insurance Co. Ltd., (2019) 6 SCC 212, has categorically held that where the conditions of exclusion under the policy document are not handed over to the insured, it is not open to the insurer to rely upon such exclusionary clauses. This principle was traced, in turn, to the earlier judgment in Modern Insulators Ltd. v. Oriental Insurance Co. Ltd. ., (2000) 2 SCC 734, where the Hon'ble Supreme Court held that an exclusion clause cannot bind an insured who was kept unaware of it. The principle was most recently reaffirmed and elaborated by the Hon'ble Supreme Court in M/s Texco Marketing Pvt. Ltd. v. TATA AIG General Insurance Company Ltd. and Ors., Civil Appeal No. 8249 of 2022,
decided on 09.11.2022, where the Hon'ble Court held that the insurer is under a statutory obligation under Clause 3(ii) of the Insurance Regulatory and Development Authority (Protection of Policyholders' Interests) Regulations, 2002, to furnish all material information relating to the policy, including its exclusions, to the insured, and that non-compliance with this obligation takes away the insurer's right to plead repudiation by reliance upon such terms.
This Commission finds that the position in the present case is squarely covered by the above authorities. Clause VI.1 is, in effect, an exclusion and forfeiture clause of the most severe character available under the policy which permits the insurer to declare the entire policy void from inception and to forfeit the premium already received. There is no evidence that this clause, or the policy terms and conditions generally, were furnished to or explained to the complainants at or before the time of taking the policy, and the complainant's sworn and unrebutted testimony is to the contrary. Applying Bharat Watch, Modern Insulators, and Texco Marketing, this Commission holds that Clause VI.1 cannot be relied upon by Opposite Party Nos. 1 and 2 to repudiate the claim or to cancel the policy.
This Commission now turns to the authorities relied upon by Opposite Party Nos. 1 and 2, to consider whether they assist the insurer's case or are distinguishable on facts. Satwant Kaur Sandhu v. New India Assurance Company Ltd., (2009) 8 SCC 316, lays down the general definition of 'material fact' as one which would influence the judgment of a prudent insurer. This proposition is however, does not address and was not concerned with the separate and distinct question of whether an exclusion or forfeiture clause can be enforced against an insured who was never made aware of it. The two propositions operate on different planes, i.e., the duty to disclose material facts is of the insured, while the duty to communicate the consequences of non-disclosure (i.e., the exclusion clause itself) is owed by the insurer. This case does not assist the insurer on the latter question, which is actually in issue on Point No. 2. Life Insurance Corporation of India v. Smt. Neelam Sharma (NCDRC) and Shri Gulshan Rai Verma v. M/s Religare Health Insurance, Complaint No. 1264 of 2017 (SCDRC Delhi), both proceed on facts where the insured's non-disclosure was found, on the evidence in those cases, to be clear, deliberate, and material to a condition causally connected with the claim. Neither decision deals with a case where the insurer failed to communicate its own exclusion clause to the insured, nor with a case where the alleged non-disclosed condition was found, on unrebutted medical evidence, to be unconnected with the ailment actually claimed for. These decisions are therefore distinguishable on facts and do not assist Opposite Party Nos. 1 and 2 in the circumstances of the present case.
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Sgs India Ltd. (S) v. Dolphin International Ltd. (S)., LL 2021 SC 544, is cited for the general proposition that the burden of proving deficiency in service lies upon the complainant. This Commission has, in its discussion under Point No. 1 above, applied precisely that standard and has found, on the evidence actually placed on record including the unrebutted clarification of the treating doctor and the contemporaneous blood sugar reports that the complainants have discharged that burden. The proposition in SGS India does not, therefore, assist Opposite Party Nos. 1 and 2 as, that burden is found, on facts, to have been met.
Export Credit Guarantee Corpn. of India Ltd. v. M/s Garg Sons International is relied upon for the proposition that insurance contracts must be strictly construed and that the rule of contra proferentem does not apply to commercial contracts. This Commission notes, with respect, that the policy in the present case is a consumer contract of insurance issued to individual retail policyholders through a bank's group scheme, and is not a commercial contract of the kind considered in that decision. In any event, strict construction of a contract presupposes that both parties were aware of its terms; it cannot be pressed into service to enforce a clause that was never communicated to one of the parties in the first place. This authority is accordingly distinguishable and does not advance the insurer's case on Point No. 2. Bajaj Allianz General Insurance Co. Ltd. v. Rameshbhai Shivabhai Patel &Ors., Appeal No. 628/2014, and Aman Kapoor v. National Insurance Co. Ltd., Revision Petition No. 429/2017, both concern policy clauses prescribing waiting periods for specific categories of ailments (spinal cord treatment and congenital internal disease, respectively) which were undisputedly part of the policy terms known to the parties. Neither decision involved a dispute as to whether the exclusion or waiting-period clause itself had been communicated to the insured. These decisions therefore proceed on a materially different factual foundation and do not assist Opposite Party Nos. 1 and 2 on the question of enforceability of an uncommunicated clause. Reliance Life Insurance Company v. Rekha Ben Naresh Bai Rathore, Civil Appeal No. 4261 of 2019 (SC), is the authority most strongly pressed by Opposite Party Nos. 1 and 2. On a closer examination, however, that case is readily distinguishable. The non-disclosure found by the Hon'ble Supreme Court in that case was the insured's failure to disclose the existence of an earlier, separate life insurance policy taken out only two months before the policy in question, which is a fact going directly to the insurer's assessment of insurable interest and risk-stacking, and one which the insured could not have been unaware of, since it concerned a policy he himself had taken. The Hon'ble Supreme Court was not concerned, in that case, with any question of whether the insurer had communicated its own policy terms or exclusion clauses to the insured; nor was it concerned with a disputed medical condition of a transient nature, subsequently clarified by the treating doctor, and unconnected with the cause of the claim. The facts of the present case are materially different on both counts: here, what is alleged to be undisclosed is a transient and clinically resolved health episode, clarified in writing by the treating doctor himself, and unconnected with the ailment for which the claim was made; and the policy's own forfeiture clause was never shown to have been communicated to the insured. For these reasons, Reliance Life Insurance does not assist Opposite Party Nos. 1 and 2 in the present case. For all the foregoing reasons, this Commission holds that Clause VI.1 has not been shown to have been duly communicated to the complainants in a manner that would make it binding upon them for the purpose of voiding the policy and forfeiting the premium already paid, and that the
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authorities relied upon by Opposite Party Nos. 1 and 2 are, for the reasons recorded above, distinguishable and do not assist their case. Point No. 2 is decided in favour of the complainants.
Point No. 3 — Unfair trade practice in retrospective cancellation:
The complainants' BNA and oral submission contended that cancellation of the policy from inception, without refund of premium, immediately upon the occasion of the first claim, is itself proof of unfair trade practice, particularly where the complainants are senior citizens whose treatment costs was tried to avoid by the Insurer. Opposite Party Nos. 1 and 2 do not, in their BNA or in oral argument separately justify the retrospective character of the cancellation and their submissions are confined to defend the underlying repudiation on the ground of non-disclosure and also on the footing that if the repudiation is valid, the consequential cancellation must also stand.
Opposite Party No. 1, upon repudiating the claim on 11.07.2019, simultaneously terminated the policy with effect from its inception, i.e., 23.03.2018, more than a year after the policy had commenced and after premium had been accepted and retained for that period. The complainant has specifically asked, in cross-examination, whether the premium paid was returned after cancellation, to which no satisfactory answer establishing refund has been placed on record. A policy that has run for over a year, during which premium has been accepted by the insurer, being voided from its very inception upon the occasion of the first claim without refund of premium is a course of conduct that this Commission finds to be one-sided and contrary to fair dealing. Such conduct falls within the meaning of unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019, since it deprives the insured of the benefit for which premium was paid, while the insurer retains that premium notwithstanding the cancellation it has itself effected. Point No. 3 is decided in favour of the complainants.
Point No. 4 — Entitlement to reimbursement of complainant No. 2's expenses:
Having held that the repudiation of the complainant No. 1's claim and the retrospective cancellation of the policy are both unsustainable, the policy must, for the purposes of this case, be treated as having continued in force for the period for which premium was paid and the policy stood renewed, namely, up to 22.03.2020.
The complainant No. 2 was hospitalised at Apollo Gleneagles Hospital from 15.06.2020 to 19.06.2020 for treatment of COVID-19, Respiratory Tract Infection, and Hypertension, and thereafter at The Mission Hospital, Durgapur, from 30.07.2020 to 10.08.2020 for excision of LA Myxoma. This Commission notes that these hospitalisations occurred after 22.03.2020, i.e.,the date up to which the policyperiod was extended, as stated by Opposite Party Nos. 1 and 2 themselves in their written version. There is no evidence on record of a further renewal of the policy beyond 22.03.2020. In the absence of proof of a subsisting policy covering the period of the complainant No. 2's hospitalisations in the aforesaid periods, this Commission is unable to hold that those specific claims are payable under the policy as a matter of contractual entitlement, notwithstanding the fact that the original cancellation has been held to be bad in law. Nevertheless, since the wrongful repudiation and cancellation of 11.07.2019 casted a cloud
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over the insurance status of both complainants from that date onward, and since Opposite Party Nos. 1 and 2 cannot be permitted to take advantage of the very wrong they have committed, this Commission directs that the question of whether the policy would, in the ordinary course and due to unlawful cancellation, have continued and been available to the complainant No. 2 at the time of her hospitalisations in 2020, be left open for Opposite Party Nos. 1 and 2 to consider through restoration of continuity benefits.
Point No. 4 is decided partly in favour of the complainants, to the extent indicated above.
Point No. 5 — Liability of Opposite Party No. 3:
The complainant's grievance against Opposite Party No. 3 is that its Branch Manager introduced the complainant No. 1 to Opposite Party No. 4, thereby lending credibility to the insurance product sold by Opposite Party Nos. 1 and 2. In his reply to the questions put on behalf of Opposite Party No. 3, the complainant No. 1 has stated that 'the Bank has acted as agent of OP No. 1 and 2 and as such has received consideration', though this is not supported by any document on record establishing receipt of commission by name or amount. It is well established that a bank acting as a corporate agent for the sale of insurance products, without itself assuming any underwriting risk or any role in claim settlement, and without a direct contractual or principal-agent relationship with the insured in respect of the insurance contract itself, cannot be held liable for the insurer's subsequent acts of repudiation or cancellation. In the present case, the policy was issued and premium received by Opposite Party Nos. 1 and 2 alone and Opposite Party No. 3 did not participate in the decision to repudiate the claim or to cancel the policy and no specific act of misrepresentation or deficiency independently attributable to Opposite Party No. 3 has been established on the evidence. Point No. 5 is accordingly decided against the complainants. The complaint as against Opposite Party No. 3, Bank of Maharashtra, is liable to be dismissed.
Point No. 6 — Relief:
In view of the findings recorded above, the complainants are entitled to relief against Opposite Party Nos. 1 and 2 as set out herein below. In result, the instant case succeeds.
IX. Hence, it is
ORDERED
that the instant complaint case be and the same is allowed in part against Opposite Party Nos. 1 and 2 and is dismissed on contest against Opposite Party No. 3 and ex-parte against the Opposite Party No.4.
The repudiation of the claim of the complainant No. 1 bearing Claim No. 19974336, communicated by letter dated 11.07.2019 is hereby set aside. The cancellation of Policy No. 100200018882, communicated with effect from inception of the policy, is also set aside. Opposite Party Nos. 1 and 2 are jointly and severally directed to pay to the complainants a sum of Rs.2,75,000/- (Rupees Two Lakhs Seventy Five Thousand) only towards reimbursement of
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the treatment expenses of the complainant No. 1, together with simple interest thereon @ 9% per annum from 11.07.2019 till the date of actual payment.
Opposite Party Nos. 1 and 2 are jointly and severally directed to pay to the complainants a sum of Rs.75,000/- (Rupees Seventy Five Thousand) only as compensation for mental agony and harassment suffered on account of the wrongful repudiation and cancellation and they are also jointly and severally directed to pay to the complainants a sum of Rs.15,000/- (Rupees Fifteen Thousand) only as costs of litigation.
The above amounts shall be paid by Opposite Party Nos. 1 and 2 within forty-five (45) days from the date of this order, failing which the amount awarded as compensation shall carry interest @ 12% per annum from the date of default until actual payment.
The prayer of the complainants for issuance of a fresh policy with continuous effect and all benefits as well as the claim for reimbursement of the expenses towards hospitalization and treatment of the complainant No.2 together with post-operative expenses of Rs.2,00,000/- are disposed of being otherwise rejected in terms of the discussion under Point No. 4 above. Copy of this Judgment be supplied to the parties free of cost as per Rules. Upload the Judgment in the official website of this Commission at the earliest and the record be consigned to the Record room after completion of all formalities. Dictated & corrected by me.
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President, DCDRC, Kolkata Unit-I
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KALLOL CHATTOPADHYAY
PRESIDENT
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SAHANA AHMED BASU
FEMALE MEMBER
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RUKHSANA SAMIM
MEMBER
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