Roll No.

: 09

Batch: 2018-2023

GLS LAW COLLEGE

LAW OF INSURANCE

TOPIC
Complain in State Consumer Commission by Insurer - Mediclaim

SUBMITTED TO – Ms. Hiral Shukla, Asst. Prof. (Law), GLS Law College.
Ms. Ishani Dave, Asst. Prof. (Law), GLS Law College.

SUBMITTED BY:-

NAME - Dave Kandarp Dushyant

SEMESTER - 8

DIVISION - A

ROLL NO. - 09

ACADEMIC YEAR - 2021-22

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 BEFORE THE HON’BLE CONSUMER DISPUTE REDRESSAL
COMMISSION OF GUJARAT STATE AT AHMEDABAD

APPEAL NO. _______ OF 2021

APPELLANT: ManipalCigna Health Insurance Company Limited (formerly

known as CignaTTK Health Insurance Company Limited)
201, 2nd Floor Megha House b/s HDFC Mutual Fund Office, Opp.
Mayor’s Residence, Mithakhali Six Rd, Ahmedabad, Gujarat –
380009.
V/S

RESPONDENTS: (1) Pratham Ketanbhai Shah

F-13 Mahavir Tower, Bhuyangdev Cross Road Ahmedabad.
(2) Darshan Kalpeshbhai Kothari
T-401 ICB Flora, Devnagar, Ahmedabad.

APPEAL UNDER SECTION 41 OF THE CONSUMER PROTECTION ACT

The Appellant most respectfully submits as under:

1. The present appeal is filled against the order passed by the Ld. District Consumer
Disputes Redressal Commission of Ahmedabad in Complaint No. 61/2020 directing
the Appellant to pay of Rs. 2,29,897/- along with interest from the date of Complaint
along with cost of the complaint to Respondent.

2. The short facts giving rise to the above appeal are as under:

3. The original complaint – Pratham Ketanbhai Shah had filled the above referred
Consumer Complaint before the Ld. District Consumer Disputes Redressal
Commission of Ahmedabad against the present Appellant for the recovery of claim
amount along with the interest and cost of the proceedings numbered as CC No.
61/2020.

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4. It is humbly submitted that the respondent no.1 (herewith referred as “complaint” or
“insured”) had approached the appellant company for obtaining a Mediclaim policy
and had submitted the duty filled proposal form.

5. It is humbly submitted that the complaint under Section – 5 (Medical and Lifestyle
information) of the proposal form, had not disclosed and pre-existing illness for both
the insured members. That, basis the information provided by the complaint in the
proposal form, the appellant had issued the policy to the complaint, details of which
are mentioned below:

Policy No. PROHLR980182301

Product ProHealth-Protect
Proposer Pratham K Shah
Insured Pratham K Shah (Self)
Harini P Shah (Wife)
Policy Period 29-08-2018 to 28-08-2019
Sum Insured Rs. 4,50,000/-
Policy Status Terminated

6. It is humbly submitted that the complaint had filed the consumer complaint against
the opponent before the Ld. District Consumer Disputes Redressal Commission of
Ahmedabad for claiming the hospitalization expenses of Rs. 2,29,897/- incurred
during the insured’s hospitalization form 12/12/2018 to 29/12/2018. However, it is
pertinent to mention herein that the complaint has not lodged any claim before the
Appellants.

7. It is humbly submitted that the complaint filed by the complainant in CC no. 61/20
was a premature complaint as the complainant had not registered any claim with the
Appellants before filling the consumer complaint. Hence, the complaint itself doesn’t
satisfy the criteria of ‘deficiency in service’ as defined under the provisions of the
consumer protection act for filling the consumer complaint.

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8. It is humbly submitted that since the Ld. District Commission had decided the pre-
mature complaint against the present Appellant without considering the genuine
defence and granting the opportunity to the Appellant for proper assessment and
evaluation of the claim. The Appellant is required to file present appeal on the
following grounds:

GROUNDS
9. The Appellant submits that the impugned order passed by the Ld. District
Commission is illegal, unjust, improper, and contrary to the provisions of law and the
settled principles of law and hence, liable to be quashed and set aside.

10. The Appellant further submits that there was no deficiency of service on the part of
Appellant as the claim was never lodged with the Appellants and the Ld. District
Commission ought to have rejected the complaint as it being a pre-mature complaint.

11. The order passed by the Ld. District Commission is not suitable at laws as the same
seems to be passed just in a routine manner and is required to be set aside. The
complaint was a pre-mature complaint as the claim was never lodged with the
Appellants.

The Ld. District Commission has failed to appreciate that the suppression of
material facts was proved by the appellant insurance company in connected
complaint no. 60/20.

12. That upon preliminary review of the discharge summary of the present complaint, it
was found that the treatment taken under the disputed hospitalization is in
continuation of the treatment taken under the claim disputed in CC 60/20. Hence, the
present claim would also have been rejected for non-disclosure of material
information.

13. It is of utmost importance that the medical condition of emphysematous

pyelonephritis (EPN) is a necrotizing infection which results in gas within the renal
parenchyma, collecting system, or perinephric tissue. A majority of cases occur in
patients with diabetes mellitus (DM). In EPM, early aggressive medical treatment

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 may avoid nephrectomy. Thus, the non-disclosed condition of DM since 10-12 years,
the diagnosed EPN and the subsequent nephrectomy are all correlated medical
conditions and have direct impact on the disputed claims.

14. It is humbly submitted that as per settled law, the duty is cast upon the interest to
disclose all the material facts regarding his/her health in the proposal form. The term
“material facts” has not been defined in the Act. However, the Insurance Regulatory
and Development Authority (Protection of Policy holder’s Interest) Regulations, 2002
has defined the word “material” as “Important”, “Essential”, “Relevant” information
in the context of guiding the insurer to decide whether to undertake risk or not. It was
very imperative for the insured to declare his/her prior ailments/conditions/diseases as
it was within his/her special knowledge which she deliberately and fraudulently failed
to intimate the insurance company. Therefore, also the present appeal must be
allowed.

15. It is humbly submitted that the Ld. District Commission has failed to follow the
settled law as described in 2009 (8) SCC 316, Satwant Kaur Sandhu Versus New
India Assurance Company Limited, wherein it has been held that “In a contract
of insurance, any fact which would influence mind of a prudent insurer in deciding
whether to accept or not to accept risk is a material fact”. In the present case if the
insurer had in good faith declared that the co-insured had a pre-existing
disease/condition, the insurance company would have taken a decision whether to
issue the insurance policy or not. It is quite clear that the insured intentionally
concealed with a malafide intention, the presence of pre-existing disease.

16. That the Ld. District Commission has failed to follow the substantive part of the
judgment of Satwant Kaur Sandhu (Supra), which states the following:
McGillivray on Insurance Law (Tenth Edition) has summarised the assured’s duty to
disclose as under: “…the assured must disclose to the insurer all facts material to an
insurer’s appraisal of the risk which are known or deemed to be known by the assured
but neither known nor deemed to be known by the insurer. Breach of this duty by the
assured entitles the insurer to avoid the contract of insurance so long as he can show
that the non-disclosure induced the making of the contract on the relevant terms.”

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17. Over three centuries ago, in Carter V/s. Boehm, (1766) 3 Burr. 1905. Lord Mansfield
had succinctly summarised the principles necessitating a duty of disclosure by the
assured, in the following words: -

“Insurance is a contract of speculation. The special facts upon which the contingent
chance is to be computed lie most commonly in the knowledge of the assured only; the
underwriter trusts to his representatives, and proceeds upon the confidence that he
does not keep back any circumstance in his knowledge to mislead the underwriter into
a belief that the circumstance does not exist. The keeping back such circumstance is a
fraud, and therefore the policy is void. Although the suppression should happen
through mistake, without any fraudulent intention, yet still the underwriter is deceived
and the policy is void; because the risqui run is really different form the risqui
understood and intended to be run at the time of the agreement…The policy would be
equally void against the underwriter if he concealed…Good faith forbids either party,
by concealing what he privately knows, to draw the other into a bargain form his
ignorance of the fact, and his believing the contrary.”

Therefore, it is quite clear that the duty is cast on the insured to come clean on all the
relevant “material” facts.

18. It is further submitted that as per the Regulation 2 (1) (d) of the Insurance Regulatory
and Development Authority (Protection of Policy holders Interest) Regulations, 2002,
provides for the term “Proposal form”: “A form to be filled in by the proposer for
insurance, for furnishing all material information required by the insurer in respect of
a risk, in order to enable the insurer to decide whether to accept or decline, to
undertake the risk, and in the event of acceptance of the risk, to determine the rates,
terms and conditions of a cover to be granted”. All the questions on the proposal are
extremely relevant and they help the insurance company in deciding whether to accept
the proposal or not and if yes, then at what rates. Thus it is evident that the impugned
policy has been procured with an immoral intention to defraud the present insurer by
hiding the prior ailments/conditions/treatment undertaken by the insured.

19. The reason for the above referred argument is because if the insured truthfully
declares the ailments, the insurer has 3 options: 1) To avoid issuance of the insurance

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 policy 2) To issue at higher premium 3) To place the declared disease under pre-
existing disease for which treatment would be excluded. As the insured did not
declare the major ailments, the insured took away the right to insurer to avail the
above 3 options. On this ground the appeal must be allowed.

20. It is humbly submitted that the Ld. District Commission erred in holding that the
proposal is not signed and hence cannot be relied upon. However, the complainant has
never denied filing up the proposal form or the handwriting on the proposal form.

21. That the present dispute involves complicated questions of law and facts including
appreciating evidence to medical terminology, documents, etc. Therefore, the present
dispute is beyond the scope of summary jurisdiction of the Ld. Consumer Courts.

22. That the total liability of an insurer cannot go beyond the stipulated Sum insured
under the policy. In the present case, the Ld. District Commission had passed joint
order in CC no. 60/20 and 61/20 fastening total liability under both the complaints to
the tune of Rs. 5.66 lacs. However, the total Sum Insured opted by the complaint at
the time of purchasing the policy was only Rs. 4.5 lakhs. Hence, it is humbly
submitted that under no circumstances the Company’s liability can go beyond the
agreed Sum Insured under the policy.

That the total award amount for both cases is beyond the sum insured.

23. That the award amount for both the cases is Rs. 3,36,711 + 2,29,897 = Rs. 5,66,08/-.
The sum insured was Rs. 4,50,000/-. Hence there is a difference of Rs. 5,66,608/- -
Rs. 4,50,000/- = Rs. 1,16,608/-.

24. It is humbly submitted with due respect that both the cases ought not to have been
clubbed by the Ld. District Commission. In one case there was no written statement
due to non-receipt of the summons/complaint. In one of the cases there was no
counter reply by the complainant. The claims of both the cases were different. Hence
the ideal scenario would have been to dispose both the cases separately by separate
orders.

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 25. That the appellant relies on the written statement, arguments submitted by the
Advocate for the insurance company before the Ld. District Commission as if they are
part of this appeal memo. However the same are not repeated for the sake of brevity.

26. It is humbly submitted that in view of the aforesaid true facts and circumstances, it
could not be said that there was deficiency of service or negligence or unfair trade
practice on the part of the insurance company.

27. The appellant craves leave to add to attend, alter or delete any grounds, if and when
necessary.

28. It view of the above true and correct facts, the Appellant most respectfully prays as
under:
i. The Hon’ble Commission may be pleased to quash and set aside the order pass
by the Ld. District Consumer Dispute Redressal Commission of Ahmedabad
in Complaint No. 61/2020 dated 06/10/2021.

ii. Any other further and better relief, if deemed fit and proper be granted in
favour of the Appellant.

29. The certified copy of the order passed by the Ld. District Commission along with
necessary documentary evidence is annexed herewith for the kind perusal of the
Hon’ble Commission.

30. The affidavit in support of the present appeal is filed herewith. The appropriate fee
along with the present appeal is also enclosed.

On these and other grounds that may be urged at the time of hearing, the present appeal be
allowed as per prayed for.

Ahmedabad _______________
Date: 15/12/2021 For the Appellant