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2020 Supreme(Del) 743
IN THE HIGH COURT OF DELHI AT NEW DELHI
Navin Chawla, J.
Pavan Sachdeva - Appellant
Versus
Office Of Insurance Ombudsman & Anr. - Respondent
Writ Petition (Civil) No. 6304 of 2019
Decided On : 27-07-2020
Petitioner In Person, Advocate, Sushant Thakur, Advocate
The duty of disclosure in insurance contracts, the materiality of information from the insurer's perspective, and the reasonableness of repudiation of the Policy and rejection of the claim.
Headnote:
Insurance - Health Insurance Policy - Cigna TTK Health Insurance Family Policy - Clause VIII.1 and VIII.2 of the Policy - Duty of Disclosure - Material Change - Supreme Court judgments on insurance contracts - Uberrimae fidei - Materiality of information - Misstatement and concealment - Repudiation of Policy - Maintainability of Writ Petition challenging repudiation of insurance claim
Fact of the Case:
The petitioner filed a petition challenging the rejection of his claim under the Cigna TTK Health Insurance Family Policy due to non-disclosure of Sarcoidosis, a preexisting condition. The respondent no. 2 repudiated the claim citing Clause VIII.1 of the Policy, which nullifies the Policy in case of non-disclosure of material particulars. The petitioner contended that the non-disclosure of Sarcoidosis, which occurred 35 years before obtaining the Policy and was cured within three months, should not be considered a material non-disclosure. The respondent no. 2 upheld the rejection based on the Supreme Court judgment emphasizing utmost good faith in insurance contracts and the duty of the insured to make a true and full disclosure of information. The petitioner challenged the rejection, arguing that the non-disclosure of Sarcoidosis did not amount to concealment of material particulars. The respondent no. 2 contended that the petitioner's non-disclosure was material and intentional, as evidenced by the disclosure of the same at the time of hospital admission. The court considered the duty of disclosure under the Policy and relevant Supreme Court judgments on insurance contracts.
Finding of the Court:
The court found that the non-disclosure of Sarcoidosis, which occurred 35 years before obtaining the Policy and was cured within three months, did not amount to concealment of material particulars. The court emphasized the duty of disclosure in insurance contracts and the materiality of information from the insurer's perspective. The court also considered the Proposal Form and Medical Examination Report Form, which did not specifically inquire about Sarcoidosis. The court held that the repudiation of the Policy and rejection of the claim by the respondent no. 2 were unreasonable and could not be sustained. The court also addressed the maintainability of the Writ Petition challenging the repudiation of the insurance claim, citing relevant Supreme Court judgments and the object of the Insurance Ombudsman Rules.
Issues: The issues involved in the case were the duty of disclosure under the Cigna TTK Health Insurance Family Policy, the materiality of non-disclosure of Sarcoidosis, the reasonableness of the repudiation of the Policy and rejection of the claim, and the maintainability of the Writ Petition challenging the repudiation of the insurance claim.
Ratio Decidendi: The court held that the non-disclosure of Sarcoidosis, which occurred 35 years before obtaining the Policy and was cured within three months, did not amount to concealment of material particulars. The court emphasized the duty of disclosure in insurance contracts and the materiality of information from the insurer's perspective. The court also addressed the maintainability of the Writ Petition challenging the repudiation of the insurance claim, citing relevant Supreme Court judgments and the object of the Insurance Ombudsman Rules.
Final Decision: The court directed the respondent no. 2 to pay the petitioner a sum of Rs. 6,06,859/- along with simple interest at the rate of 9% per annum with effect from 01.10.2017 till the date of payment. The respondent no. 2 was also ordered to pay cost quantified as Rs. 25,000/- to the petitioner.
JUDGMENT
Navin Chawla, J. - This petition has been filed by the petitioner inter alia challenging the order dated 21.02.2019 passed by the respondent no. 1 whereby the complaint of the petitioner against the rejection of his claim under the "Cigna TTK Health Insurance Family Policy" (hereinafter referred to as the "Policy") taken by him was rejected and the decision of the respondent no. 2 was upheld.
2. It is the case of the petitioner that the petitioner had obtained the abovementioned Policy from the respondent no. 2 on 14.08.2017. On 16.09.2017, while undertaking his morning walk, the petitioner felt mild pain and visited Fortis Escort Hospital. On 23.09.2017, after an Angiography, the petitioner was advised to undergo a bypass surgery, which was duly carried out on the petitioner. The petitioner lodged a claim against the abovementioned Policy with the respondent no. 2, however, the respondent no. 2 denied the same with the following remarks:-
"Note: The policy since 14/8/2017. The liability cannot be ascertained at this juncture, as the patient has history of Sarcoidosis since 1997; which is preexisting to the policy inception with CignaTTK which is non-disclosure of material facts; hence cashless denied."
3. The petitioner protested against the said rejection and the respondent no. 2 deputed an officer to visit the petitioner to record his statement. In the statement so recorded, the petitioner clarified that the petitioner had Sarcoidosis in 1982 and was advised to take steroids, which he took for a period of three months in 1982 and was perfectly fine thereafter. This fact was also recorded in the Discharge Summary of the petitioner issued by the hospital.
4. The respondent no. 2, however, by an e-mail dated 21.10.2017, again rejected the claim of the petitioner and terminated the Policy alleging "non-disclosure of material fact".
5. The petitioner protested against the same with the Grievance Management Cell of the respondent no. 2, however, by an e-mail dated 22.11.2017, the same was again rejected relying upon Clause VIII.1 of the Policy.
6. The petitioner feeling aggrieved of the said rejection filed a complaint with the respondent no. 1, which has been rejected by way of the Impugned Order observing as under:-
"4. I heard both the sides the complainant as well as the Insurance Company. During the hearing, the complainant reiterated that he had been hospitalized in Fortis Escorts Hospital from 23.09.2017 to 01.10.2017 for treatment of coronary angiography and bypass surgery was done. He submitted claim documents for Rs.600309/- only, and his claim was rejected and policy was terminated by the company due to non disclosure of Sarcoidosis disease at the inception of insurance policy. The Insurance Company reiterated that the insured complainant did not disclose the previous history of Sarcoidosis of the patient at the inception of the Insurance Policy, hence they terminated the said policy and rejected the claim. The Discharge Summary dated 01.10.2017 confirms that the insured patient had Sarcoidosis since 1982. During the Pre-Medical Examination, the insured did not reveal his previous medical history of Sarcoidosis at the inception of the said insurance policy, hence the said claim is not payable as per the terms and conditions of the policy. It is a clear case of non-disclosure. As per the Supreme Court judgment in the case of Satwant Kaur Sandhu vs. New India Assurance, (2009) 8 SCC 316 , the Hon''ble Supreme Court emphasised that insurance is a contract of utmost good faith on the part of the insured, when an information on a specific aspect is asked for in the proposal form. An insured is under solemn obligation to make a true and full disclosure of the information on the subject, which is within his knowledge. The Insurance Company is not liable to pay any expenses in case of non-disclosure of material fact at the time of taking the policy. The claim was denied due to non-disclosure of material information as
