REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.    1616           OF 2009 (Arising out of SLP (C) No.16445 of 2006)

New India Assurance Co. Ltd.  ..Appellant

Versus

Satpal Singh Muchal  ..Respondent

J U D G M E N T

Dr. ARIJIT PASAYAT, J.

1. Leave granted.

2. Challenge  in  this  appeal  is  to  the  order  passed  by  the  National

Consumer Disputes  Redressal  Commission  (hereinafter  referred to  as  the

‘National  Commission’)  dismissing  the  revision  petition  filed  by  the

appellant.   Order passed by the  State  Commission,  Madhya Pradesh was

under  challenge  before  the  National  Commission.   The  State  Consumer

Disputes  Redressal  Commission  (hereinafter  referred  to  as  the  ‘State

Commission’)  had  dismissed  the  appeal  filed  by  the  insurer  against  the

order passed by the District Consumer Redressal Forum, Indore (in short the

‘District Forum’).

3. Background facts as projected by the appellant are as follows:

Respondent took a Medi-claim policy in the month of January, 1999.

The policy was renewed lastly on 22.1.2002 for a period of one year i.e. till

21.1.2003.  Respondent was suffering from kidney trouble and intimated the

same to the Divisional office of the appellant No.1-company.  On receiving

the intimation that the respondent was suffering from kidney trouble, insurer

terminated the policy by letter dated 18.6.2003 with effect from 17.2.2002

by placing reliance on clause 5.9. of  the policy.  Respondent issued notice

to  the  appellant  calling  upon  them  to  treat  the  policy  of  insurance  as

subsisting  and  to  bear  the  expenses  of  the  treatment  of  the  respondent.

Another notice was issued on 2.7.2002 calling upon the appellant to pay the

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claim of the respondent.  Appellant replied to the notice.  Again respondent

issued  notice  to  the  appellant  stating  that  he  was  suffering  from kidney

trouble for about last two years.  The appellant was of the view that there

was concealment of the fact of the pre existing disease at the time of taking

the policy of the insurance. It was clear that the insurance cover was taken

by concealment of material  facts and, therefore, the insurance policy was

terminated and the respondent was intimated.  The respondent was refunded

pro  rata  premium  of  Rs.2782/-  by  cheque  dated  6.8.2002.  Respondent

submitted  an  application  for  renewal  of  the  policy.  The  respondent  was

intimated by letter dated 11.3.2003 that because of pre-existing disease and

adverse claim ratio, the policy of insurance has been cancelled and therefore

the request of renewal cannot be considered. Respondent filed a complaint

before the District Forum. Stand of the appellant before the District Forum

was that every policy whether it is a renewal or a fresh one is purely based

on a contract.  Since the respondent was suffering from kidney trouble even

prior  to the  taking of  the first  policy, there was concealment of material

particulars.  In four years the respondent had been paid as claimed amount

of Rs.95,925/-  as against the premium of Rs.17,182/- and even in the year

2003-04  a  sum  of  Rs.49,894/-  was  paid  which  indicated  adverse  claim

experience and as such in terms of clause 5.9 of the policy, the same had

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been  rightly  cancelled.   The  District  Forum directed  revalidation  of  the

policy and also directed consideration of the claim of the respondent.

 4. Against  the  said  order  an  appeal  was  preferred  before  the  State

Commission  which  as  noted  above,  dismissed  the  same.   Revision  was

carried before the National Commission which dismissed the same.

5. In support of the appeal learned counsel for the appellant submitted

that the National Commission did not consider the relevant aspects. The fact

of concealment had not been considered as also the scope and the relevance

of clause 5.9 has been totally overlooked.  

6. Learned counsel for the respondent on the other hand supported the

judgment.

7. Clause 5.9 reads as follows:

“The policy may be renewed by mutual  consent.   The company shall not however be bound to give notice that it is due for renewal and the company may at any time cancel this policy by sending the insured 30 days notice by registered letter  at  the insured’s last  address  and in such event the company shall refund to the insured a pro rate premium for un expired period of insurance.”

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8. The basic stand of the appellant was that there was concealment of

the factum of ailment to the kidney when the first application for insurance

cover  was  made.   Additionally  the  effect  of  clause  5.9  has  not  been

considered.

9. Reference was made by learned counsel for the appellant to the letter

of the respondent dated 24.6.2009 which inter alia containS the following

paragraphs:

“My client has been suffering from kidney trouble since last 2 years i.e. during the pendency of the Medi claim policy and claim was already submitted.  Now in order  to  thwart  Mediclaim,  the  insurance  Co.  cannot cancel the policy and the Insurance Co. is bound to pay the mediclaim of my client.

My  client  has  been  suffering  vehemently  and  is undergoing  vehemental  trouble  and  agony.  Your  said notice  has  told  on  the nerves  of  my client  and he has become despondent from his life.

The main intention of the said Ruces is not to defeat at the Medi claim of the insured.  Since my client has been  suffering  from  kidney  trouble  during  the recurrence  of  the  Insurance  policy,  in  Insurance Company is bound to make payment, of the Medi claim submitted by my client.”

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10. It  appears  that  the  District  Forum,  the  State  Commission  and  the

National Commission have not considered the effect of clause 5.9 and the

admissions made by the respondent in his letter as quoted above.  

11. That being so, we remit the matter to District Forum to consider the

matter  afresh,  taking  into  account  the  consequences  flowing  from  the

factum of concealment and the applicability of clause 5.9 to the facts of the

case.  The appeal is allowed, but there shall be no order as to costs.

….……......................................J. (Dr. ARIJIT PASAYAT)

……………….………...............J. (ASOK KUMAR GANGULY)

New Delhi, March 16, 2009                                                            

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