Supreme Court holds Insurance company liable for reimbursement, does away with the claims of concealment of facts in the case of Om Prakash Ahuja vs Reliance General Insurance Co Ltd.

Date of Order:

4th July 2023

Bench:

Justice Abhay S. Oka

Justice Rajesh Bindal

Parties:

Om Prakash Ahuja

 …Appellant(s)

Versus

Reliance General Insurance Co. Ltd. Etc.

 …Respondent(s)

SUBJECT

• Common order dated 26.11.2018 passed by the National Consumer Disputes Redressal Commission (for short, “the National Commission”) in Revision Petition Nos. 923 of 2011 and 1417 of 2014 is under challenge before this Court.
• The SC held that the insurance company cannot deny renewal for the period from 07.07.2009 onwards. The District Forum directed renewal, but the policy was not renewed. 
•  The National Commission’s order was set aside, and the appellant’s claim for reimbursement was held justifiable.

OVERVIEW

• The appellant claimed that Reliance General Insurance Ltd. Did not reimburse his expenses for his wife’s ovarian cancer treatment. The policy, valid from 2007 to 2008, covered ₹2 lakhs for health problems and ₹4 lakhs for critical illnesses.
•  The deceased wife was diagnosed with ovarian cancer and received treatment from 2008 to 2009. The insurance company repudiated the claim, citing rheumatic heart disease.
• The appellant filed a complaint against the insurance company for refusing to renew his health insurance policy. The District Forum directed reimbursement of expenses for his wife’s treatment and interest at 8% per annum. The State Commission dismissed the appeal, and the National Commission upheld the State Commission’s direction, but set aside the renewal direction for the health insurance policy.
• The Insurance Company filed a revision petition against the State Commission’s order in Appeal No. 689/2013. The complaint alleged that the appellant had purchased a health insurance policy for their family from 2007 to 2009, which was renewed in 2011. The complainant spent a total of ₹ 3,23,486.50 on the policy, and a claim was lodged with the insurance company.
• A complaint was filed against the insurance company, who claimed the renewal was in accordance with the earlier complaint. The National Commission challenged this, determining no claim admissible. 
• The District Forum ordered reimbursement of ₹ 7,47,638.19, interest at 9% p.a., harassment compensation, and litigation expenses. The appeal was dismissed, and the National Commission allowed the Revision Petition No. 1417/2014.

ARGUMENTS ADVANCED BY THE APPELLANT

• The appellant’s counsel argued that the insurance company reimbursed expenses for his wife’s treatment, but the wife expired. The District Forum issued a direction, and the National Commission upheld it. The expenses were directed to the appellant, as rheumatic heart disease had no relation to ovarian cancer.
• The Court placed reliance on an order in Sulbha Prakash Motegaonkar v. LIC1 but the insurance company did not accept the claim for the period after 6.7.2009. The District Forum issued a direction to reimburse treatment expenses, which was upheld by the State Commission. The National Commission set aside the order, stating that nonrenewal of the policy would be unreasonable.

ARGUMENTS ADVANCED BY THE RESPONDENT

• The insurance company argued that no benefit could accrue to the appellant under an order passed by the Commission. The appellant had a policy from 2007 to 2008, renewed to 2009, and claimed expenses for treatment of his wife's illness. The direction was upheld up to the National Commission, and the insurance company has not challenged it.
• The National Commission's order stating that renewal of the policy from 7.7.2009 is not proper is correct. The appellant's last policy expired on 6.7.2009, and no renewal occurred. The policy was renewed in October 2011, subject to the final decision, and the National Commission deemed the direction issued by the State Commission incorrect.

JUDGEMENT ANALYSIS

• The appellant lodged a claim on 10.03.2008 with Paramount Health Services Private Limited, the insurance company’s agent. The policy was renewed on 07.07.2008, but the respondent insurance company did not provide a clear answer. 
• A certificate from Rajiv Gandhi Cancer Institute and Research Centre, New Delhi, details treatment for the appellant’s wife, who has been a patient since March 8, 2008. The certificate states that rheumatic heart disease and carcinoma ovary are not related.
• The appellant’s initial insurance policy was refused due to his wife’s rheumatic heart disease, which died of cancer. Renewal was refused, and the company’s rejection was subject to consideration under the Consumer Protection Act, 1986.
• The insurance company cannot deny renewal for the period from 07.07.2009 onwards. The District Forum directed renewal, but the policy was not renewed. The National Commission set aside the direction for renewal on 26.11.2018, and the premium charged for renewal remains paid.
• The insurance company’s judgments in Satwant Kaur Sandhu vs. New India Assurance Company Limited, Reliance Life Insurance Company Limited vs. Rekhaben Nareshbhai Rathod, and Oriental Insurance Company Limited vs. Mahendra Construction are not applicable to the case of repudiation of claims due to concealment of fact at the time of policy purchase.
• The National Commission’s order is set aside, and orders from the District and State Forums regarding renewing policies are restored. 
• The appellant’s claim for reimbursement of expenses is justifiable, and no cost order is issued.