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2026 Supreme(Online)(SCDRC) 5041
STATE CONSUMER DISPUTES REDRESSAL COMMISSION
Sangita Dhingra Sehgal, President, Bimla Kumari, Member
Star Health & Allied Insurance Co. Ltd. – Appellant
Versus
Priya Devi – Respondent
FIRST APPEAL NO.-620/2025
For the Appellants/Petitioners: Abhishek Nanda, Yashika Singh
For the Respondents: Shripal
Insurance contracts must be construed strictly according to their terms. An insurer is entitled to repudiate a claim for treatment at a specifically excluded hospital, provided the exclusion was duly notified, and the insured must adhere to procedural mandates like timely claim intimation.
Headnote:(A) Consumer Protection Act, 1986 - Sections 12 and 35 - Health Insurance - Claim repudiation - Insured admitted in 'excluded provider' hospital - Validity of exclusion clause - Duty of disclosure - Held, terms of insurance contract must be strictly construed - Where hospital was specifically excluded and disclosed on website, insurer is justified in repudiating claim for treatment at such facility - Repetitive filing of fraudulent claims involving common agent established pattern.
Facts of the case:
The respondent (complainant) obtained a health insurance policy from the appellant. Following hospitalization at a facility excluded under the policy terms, the claim was rejected. The District Commission previously ruled in favor of the complainant, citing lack of communication of exclusions. The insurer appealed, arguing that the policy terms were binding and that the hospital was duly listed as an excluded provider.
Findings of Court:
The Commission observed that the policy terms strictly govern the relationship between insurer and insured. Since the hospital was published as an excluded provider and the respondent failed to provide timely intimation of the claim as per the policy conditions, the repudiation was justified, and the earlier order was set aside.
Issues: Whether the repudiation of the insurance claim for treatment at an 'excluded provider' hospital was justified under the strict terms of the insurance contract.
Ratio Decidendi: Insurance contracts are to be construed strictly; terms governing exclusions are binding if notified. Once an insurer establishes that a facility is an excluded provider and the insured fails to comply with procedural conditions, the insurer is not liable for the claim.
Result: Appeal allowed.
| Table of Content |
|---|
| 1. summary of facts, initial district commission ruling, and appeal grounds. (Para 1 , 2 , 3 , 4 , 5) |
| 2. identification of the core dispute regarding policy interpretation and hospital exclusion. (Para 6 , 7 , 8 , 9) |
| 3. analysis of contractual exclusion clauses and failure to provide timely claim intimation. (Para 10 , 11 , 12 , 13) |
| 4. application of strict construction doctrine to insurance contracts as per supreme court precedents. (Para 14 , 15 , 16) |
| 5. evidence of organized fraudulent litigation patterns and evidentiary admissions. (Para 17 , 18 , 19 , 20) |
| 6. final ruling allowing the appeal and setting aside the lower consumer forum order. (Para 21 , 22 , 23 , 24) |
CORAM:
HON’BLE JUSTICE SANGITA DHINGRA SEHGAL (PRESIDENT)
HON’BLE MS. BIMLA KUMARI, MEMBER (FEMALE)
Present: Ms Yashika Singh, Counsel for the Appellant.
Mr. Shripal, Counsel for the Respondent.
PER :HON’BLE JUSTICE SANGITA DHINGRA SEHGAL, PRESIDENT
JUDGMENT
1. The facts of the case as per the District Commission record are as under:
1. “The present complaint has been filed under Section 12 and 35 of the Consumer Protection Act, 1986 (in short CP Act) against Opposite. Party (in short OP) alleging, deficiency of services.
2. Briefly stated the facts of the case are that the complainant had taken on line health insurance policy bearing no. P/161100/01/2024/005128 on from OP. The said policy was valid from 08.08.2023 to 07.08.2024 for the sum insured of Rs. 10,00,000/- (Rupees Ten Lakh Only).
3. It is further alleged that the complainant went to the Mahavir Multispecialty hospital emergency on 22.07.2024 and was advised admission in Emergency.
4. It is also alleged that the complainant was admitted in Mahavir Multispecilty Hospital for treatment on 22.07.2024 and remained hospitalized till 31.07.2024. The said hospital generated the final bills Rs.2,44,828/- (Rupees Two Lakh Forty Four Thousand Eight Hundred Twenty Eight) which was paid by complainant.
5. Complainant thereafter claimed the aforesaid bill amount from the OP, but OP rejected the claim (no. CIR/2025/160000/0909673) on 26.09.2024 with reasons mentioned as under.
It is observed from the submitted records that the insured patient was admitted and treated in an excluded provider (Hospital).
6. It is further alleged insurance company had not given any approved hospital list or booklet and term and condition nor gave any other information of the list of Excluded Provider (Hospital).
7. It is prayed that Opposite Party be directed to pay a sum of Rs.2,44,828/-(Rupees Two lakh Forty Four Thousand Eight Hundred Twenty Eight) to the complainant with pendent elite and future interest @ 18% p.a. from the date of repudiation of claim i.e. 26.09.2024 till realization. Cost of litigation be also awarded.
8. Notice of the complaint was issued to the Opposite Party (OP), who entered appearance and filed a Written Statement contesting the complaint on various grounds, including lack of jurisdiction, as the matter allegedly requires detailed evidence and cross-examination beyond the scope of summary proceedings.
9. The OP contended that the complaint is misconceived, as the Complainant ought to have first approached the grievance redressal mechanism under the IRDA (Protection of Policyholders' Interests) Regulations, 2002; hence, the complaint is liable to be dismissed for availability of an alternative statutory remedy.
10. It was further submitted that, as per settled law, rights and liabilities of the insurer and insured are strictly governed by the terms of the policy and cannot be altered on equitable considerations.
11.The OP stated that the Complainant had availed a Young Star Policy No. P/160000/01/2024/005128 covering Ms. Priya Devi (Self No PED declared) for a sum insured of ₹10,00,000/-, issued online and authenticated through OTP on 08.08.2023.
12.The OP submitted that the policy terms, conditions, exclusions, and schedule were duly provided to the Complainant, and the policy clearly stated that i
