Civil Appeal Nos. 2769-2770 of 2023

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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 2769-2770 OF 2023

Om Prakash Ahuja …Appellant(s)

Versus

Reliance General Insurance Co. Ltd. etc. …Respondent(s)

J U D G M E N T

Rajesh Bindal, J.

1. 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. We deem it appropriate to notice

the facts separately, before we deal with the arguments.

REVISION PETITION NO. 923/2011

2. This petition was filed by the respondent Insurance

Company before the National Commission challenging order dated

23.12.2010 passed by Haryana State Consumer Disputes Redressal

Commission (for short “the State Commission”) in Appeal No. 1792/09.

It was an appeal against an order dated 11.9.2009 passed by the District

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Consumer Disputes Redressal Forum, Karnal (for short “the District

Forum”), in a complaint filed by Om Prakash Ahuja, the appellant. The

grievance raised by the appellant in the complaint was that the

expenses incurred by him on treatment of his wife for ovarian cancer

were not reimbursed by the respondent, Reliance General Insurance

Ltd. (hereinafter referred to as “the insurance company”). It was

pleaded that the health insurance policy was taken by the appellant for

the family, which was valid from 7.7.2007 to 6.7.2008. The coverage

was for ₹2 lakhs against any health problem and ₹4 lakhs in case of

critical illness. The policy was further renewed up to 6.7.2009. The

deceased wife of the appellant was diagnosed to be suffering from

ovarian cancer. She was treated in various hospitals from 19.1.2008 to

23.8.2008. Claim of ₹ 91,496 was lodged for treatment from 19.1.2008

to 11.3.2008 and ₹4,14,464 for the period from 13.3.2008 to 19.9.2008.

The claim was repudiated by the insurance company vide letters dated

1.10.2008 and 8.12.2008, respectively on the ground that the

appellant’s wife was suffering from rheumatic heart disease and the

same was not disclosed in the proposal form. The complaint was filed

before the District Forum. Vide order dated 11.09.2009 the District

Forum directed the insurance company to reimburse the expenses

incurred by the appellant on treatment of his wife along with interest

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@ 8% p.a. Further, refusal to renew insurance policy was found to be

arbitrary. Direction was issued for renewal of the health insurance

policy upon payment of premium.

3. The appeal filed by the insurance company against the

order passed by District Forum was dismissed by the State

Commission vide order dated 23.12.2010.

4. While entertaining the revision petition filed by the

Insurance Company against the order passed by the State Commission,

the National Commission vide interim order dated 13.5.2011 directed

that the renewal of insurance policy shall be subject to its final decision.

Vide order dated 26.11.2018, the National Commission upheld the

directions of the State Commission to the extent of reimbursement of

expenses incurred on the treatment of the deceased wife of the

appellant, however, the direction for renewal of the health insurance

policy was set aside.

REVISION PETITION NO. 1417/2014

5. This revision petition was filed by the Insurance Company

before the National Commission against the order passed by the State

Commission in Appeal No. 689/2013 decided on 2.12.2013, whereby

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the State Commission upheld the order dated 1.8.2013 passed by the

District Forum in a complaint filed by the appellant. It was pleaded in

the complaint that the appellant had initially purchased a health

insurance policy for the family which was valid from 7.7.2007 to

6.7.2008 and it was subsequently renewed up to 6.7.2009. The said

policy was renewed in October 2011 for the period from 7.7.2009 to

6.7.2010 on payment of premium of ₹ 6105 and for the period from

7.7.2010 to 6.7.2011 on payment of ₹ 30,560 and for the period from

7.7.2011 to 6.7.2012 on payment of ₹ 30,560. As the complainant had

spent a sum of ₹ 3,23,486.50 during the period from 11.11.2009 to

11.6.2010, ₹ 2,31,307.34 during the period from 2.8.2010 to 6.6.2011,

₹ 1,18,511.50 for the period 27.6.2011 to 30.9.2011 and ₹ 74,332.80

during the period from 27.9.2011 to 28.10.2011 on treatment of his wife,

claim was lodged with the insurance company. The claims having not

been accepted, a complaint was filed. The stand taken by the

insurance company before the District Forum was that the renewal of

the policy was in terms of the order passed by the District Forum in the

earlier complaint filed by the appellant as confirmed by the State

Commission. However, the same was the subject matter of challenge

before the National Commission. Hence, no claim was admissible on

that basis. However, finally the District Forum directed for

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reimbursement of ₹ 7,47,638.19 along with interest @ 9% p.a. Besides

this, a sum of ₹ 20,000 was awarded for harassment and ₹ 5,000 towards

litigation expenses.

6. The appeal filed by the insurance company before the State

Commission was dismissed vide order dated 2.12.2013.

7. The National Commission, vide impugned order allowed

the Revision Petition No. 1417/2014 holding that once renewal of the

policy beyond 6.7.2009 was not proper, no claim was admissible.

ARGUMENTS

8. Learned counsel for the appellant submitted that it is a case

in which the appellant had got the health insurance policy for the

family. Once expenses had been incurred on the treatment of his wife,

the same were required to be reimbursed by the insurance company.

There is no dispute raised as expenses were actually incurred. The

wife of the appellant unfortunately expired. Though the direction was

issued by the District Forum, as upheld up to the National Commission,

the expenses incurred during the period 7.7.2007 to 6.7.2009 were

directed to be paid to the appellant considering the fact that the

concealment of rheumatic heart disease had no relation with ovarian

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cancer. Reliance was placed on order passed by this Court in Sulbha

Prakash Motegaonkar v. LIC

1

. However, for the period subsequent

to 6.7.2009, the claim was not accepted by the insurance company. On

a complaint filed by the appellant, a direction was issued by the District

Forum to the insurance company to reimburse the expenses incurred

on the treatment. The order was upheld by the State Commission.

However, the National Commission has erroneously set aside that

order holding that the renewal of policy was not proper. No doubt, the

health insurance policy was renewed on a direction issued by the

District Forum, as upheld by the State Commission. However, non-

renewal of a policy by the insurance company has certainly deprived

the appellant from taking the policy from any other company. At this

stage, it would be unreasonable to deprive the appellant of the fruits of

the policy in the form of claim, despite the fact that more than the

normal premium was charged by the insurance company at the time of

renewal as extra risk was covered.

9. On the other hand, learned counsel for the insurance

company submitted that no benefit could accrue to the appellant in

terms of an order passed by the Commission, which was ultimately set

1

2015 SCC Online SC 1880.

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aside. Initially the appellant had got the policy from 7.7.2007 to

6.7.2008, which was renewed up to 6.7.2009. There was some issue

with reference to the claim for expenses incurred by the appellant for

treatment of his wife as the disease from which she was suffering at the

time of purchasing the policy, was not disclosed. Still in a complaint

filed by the appellant, direction was issued for reimbursement of the

expenses incurred by the appellant. As the direction was upheld up to

the National Commission, the insurance company has not challenged

the same. Even though there may be dispute regarding the quantum

of expenses incurred.

10. There is no error in the order passed by the National

Commission whereby it has held that renewal of policy from 7.7.2009

onwards is not proper. In fact, the last policy of the appellant expired

on 6.7.2009 and thereafter there was no renewal of the policy as the

insurance company had refused to renew the same. It was in terms of

the order passed by the District Forum on 11.9.2009 as upheld by the

State Commission by order dated 23.12.2010 and the interim order

passed by the National Commission on 13.5.2011 that the insurance

policy from 7.7.2009 to 6.7.2012 was renewed in October 2011. Interim

order passed by the National Commission specifically stated that the

renewal will be subject to the final decision and finally the National

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Commission held that the direction issued by the State Commission for

renewal of the policy was not proper.

11. Issuance of insurance policy is a contract. The insurance

company cannot be compelled to sell any policy. In fact, the refusal to

renew the policy was in terms of the guidelines issued down by the

Insurance Regulatory and Development Authority dated March 31,

2009. The appellant cannot compel the insurance company to violate

those guidelines. In terms of the aforesaid guidelines, renewal of an

insurance policy can be refused on the ground of fraud, moral hazard

or misrepresentation. It is a case in which at the time of purchasing the

first policy, the appellant had concealed the factum of illness being

suffered by his wife as a result of which the claim for treatment was

made. Though that amount is not being disputed by the appellant,

however, the claim made for the period during which the policy was

renewed in terms of interim order passed by the National Commission

will not be admissible to the appellant. He further submitted that

reliance on the order passed by this Court in Sulbha Prakash

Motegaonkar’s case (supra) is totally misplaced. In the aforesaid

order, the earlier binding precedents of this Court in Satwant Kaur

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Sandhu v. New India Assurance Company Limited

2

, Reliance Life

Insurance Company Limited and Another v. Rekhaben Nareshbhai

Rathod

3

and Oriental Insurance Company Limited v. Mahendra

Construction

4

, were not considered.

DISCUSSION

12. Heard learned counsel for the parties and perused the

relevant referred records.

13. As per the facts available, in the complaint No. 50 filed by

the appellant before the District Forum, the wife of the appellant was

detected suffering from Cancer of Ovary. She was treated in various

hospitals from 19.01.2008 onwards. She remained hospitalised from

19.01.2008 to 23.08.2008. A claim of ₹ 91,416 was submitted for the

expenses incurred for treatment from 19.01.2008 to 11.03.2008. A

further claim of ₹ 4,14,464.76 was submitted for treatment from

13.03.2008 to 19.09.2008. The aforesaid claims were repudiated by the

insurance company vide letters dated 01.10.2008 and 08.12.2008,

respectively. Challenging the rejection of the claim, a complaint was

filed before the District Forum.

2

(2009) 8 SCC 316.

3

(2019) 6 SCC 175.

4

(2019) 18 SCC 209.

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14. The District Forum vide order dated 11.09.2009 accepted

the complaint. The communications of the insurance company

repudiating the claims were set aside, while holding that there was no

relation of the disease suffered by the wife of the appellant with the

disease for which treatment was taken. The action of insurance

company in refusing further renewal of the policy was also held to be

bad. Accordingly, the direction was issued to renew the policies from

the date these expired on payment of renewal charges.

15. The aforesaid order was challenged by the insurance

company before the State Commission. However, the said appeal was

dismissed. The State Commission observed that even at the time of the

first renewal of the policy from 07.07.2008 to 06.07.2009, the insurance

company was well aware of the treatment which the wife of the

appellant was undergoing, for which the claim had already been

submitted. The order dated 23.12.2010 passed by the State

Commission was challenged by the insurance company before the

National Commission.

16. Vide interim order dated 13.05.2011, the National

Commission directed that the renewal of policy in terms of the

direction issued by the District Forum, as upheld by the State

Commission, shall be subject to final decision in the Revision Petition

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No. 923 of 2011. The challenge by the insurance company before the

National Commission was only to the direction issued by the lower

authorities for renewal of the policy from 07.07.2009 onwards,

otherwise the amount spent by the appellant for treatment as claimed

in the complaint was not disputed and was duly paid.

17. In terms of the interim order passed by the National

Commission, the insurance policy was renewed for the period from

07.07.2009 to 06.07.2010 on payment of a premium of ₹6,105. Policy

was further renewed for the period from 07.07.2010 to 06.07.2011 and

from 07.07.2011 to 06.07.2012, on payment of annual premium of

₹ 30,560. The fact remains that the sum insured remained the same

from the very beginning i.e., two lakhs and four lakhs in case of critical

illness. The policy from 07.07.2009 onwards was renewed in October

2011.

18. A complaint bearing number 249 of 2012 was filed by the

appellant seeking reimbursement of the amount spent by the appellant

on the treatment of his wife of ₹3,23,486.50 for the period from

11.11.2009 to 11.06.2010, ₹2,31,307.34 for the period from 02.08.2010

to 06.06.2011, ₹1,18,511.50 for the period from 27.06.2011 to 30.09.2011

and ₹74,332.80 for the period from 27.09.2011 to 28.10.2011. The claim

was submitted by the Appellant on 14.10.2011 which was repudiated

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vide letter dated 31.01.2012, after which the complaint was filed. The

reason assigned was that the renewal of insurance policies for the

period in question was sub judice before the National Commission.

19. The District Forum accepted the complaint vide order dated

01.08.2013 and directed reimbursement of expenses incurred by the

appellant. The State Commission in an appeal filed by the insurance

company upheld the order passed by the District Forum.

20. The aforesaid order was also challenged by the insurance

company before the National Commission by filing Revision Petition

No. 1417 of 2014. The National Commission decided both the Revision

petitions vide a common order.

21. There is a letter dated 10.03.2008 on record from the

appellant to respondent no.2 namely Paramount Health Services

Private Limited, who is the agent of the insurance company. The letter

clearly suggests that the claim had been lodged and allotted number

2771734. It was thereafter that the policy for the next year was renewed

on 07.07.2008.

22. There was no clear answer given by learned Counsel for the

respondent insurance company regarding the submission of the claim

made by the appellant with its agent on 10.03.2008 which was even

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allotted a claim number 2771734. All what was sought to be explained

was that it was in process and may not be in the notice of the

department renewing the policy from 07.07.2008 till 06.07.2009.

23. The National Commission in Revision Petition 923 of 2011

set aside the direction issued by the lower authorities for renewal of

the policies beyond 06.07.2009, as it was noticed that there was

concealment of facts by the appellant at the time of purchase of the

policy with reference to the disease already suffered by his wife i.e.,

rheumatic heart disease. Once the policies for the period from

07.07.2009 onwards are not renewed, the claim for reimbursement of

expenses incurred on treatment was also rejected while setting aside

the orders passed by the lower authorities.

24. A certificate dated June 30, 2009, issued by Rajiv Gandhi

Cancer Institute and Research Centre, New Delhi has been placed on

record giving the details of the treatment given to the wife of the

appellant, who was a registered patient with the hospital since

13.03.2008 and prior to that she had undergone surgery on 31.01.2008

at AIIMS. The certificate further mentions that rheumatic heart disease

and carcinoma ovary are not related to each other.

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25. The main thrust of the argument of learned Counsel for the

insurance company is that in terms of the guidelines issued by the

Insurance Regulatory and Development Authority on 31.03.2009

regarding renewal of health insurance policies, the renewal of policy

to the appellant could be refused. The relevant clause is extracted

below from the IRDA letter dated 31

st

March, 2009.

“A health insurance policy shall be ordinarily renewable

except on grounds such as fraud, moral hazard, or

misrepresentation and upon renewal being sought by the

insured, shall not be rejected on arbitrary grounds.

Specifically, renewal shall not be denied on the ground that

the insured had made a claim (or claims) in the previous or

earlier years.”

26. The ground on which renewal of insurance policy to the

appellant is sought to be refused is that while taking the initial policy,

the appellant had failed to disclose that his wife (now deceased) was

suffering from rheumatic heart disease. Though she expired of cancer.

The fact remains that the first policy was taken by the appellant for the

period from 07.07.2007 to 06.07.2008, which was renewed for another

year. The claims even for the period, wherein valid policy was

available with the appellant, were repudiated. Renewal of policy

beyond 07.07.2009 onwards was refused relying upon the guidelines

issued by the Insurance Regulatory and Development Authority vide

communication dated March 31, 2009. The claim of the appellant was

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repudiated on that very ground namely non-disclosure of the disease

by which the wife of the appellant (now deceased) suffered at the time

of purchase of initial policy. The repudiation of claim by the insurance

company was subject matter of consideration before the Fora at

different levels under the Consumer Protection Act, 1986. The

rejection of the claim on the ground that there was concealment of

certain material facts by the appellant at the time of purchase of policy,

was not found to be tenable and the insurance company was directed

to reimburse the expenses incurred for the period from 07.07.2007 to

06.07.2009. The aforesaid amount was paid by the insurance company.

The order passed by the National Commission was not challenged any

further by the Insurance Company. From this, it is established that even

the Insurance Company accepted the fact that non-mentioning of the

disease from which the deceased wife of the appellant suffered at the

time of purchasing the policy was not material, as the death was caused

from a different disease all together. Both had no relation with each

other. Now, the insurance company cannot be permitted to raise same

plea to deny renewal of insurance policy to the appellant for the period

from 07.07.2009 onwards. Even though direction was given by the

District Forum vide order dated 11.09.2009 to renew the policy further

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but it was not renewed, till such time interim order was passed by the

National Commission on 13.05.2011.

27. Further the impugned order was passed by the National

Commission on 26.11.2018, whereby direction for renewal of policies

was set aside. The amount of premium charged by the insurance

company for renewal of policies has not been refunded. Meaning

thereby the premium for renewal of the policies for the period in

dispute stands paid.

28. The judgments of this Court relied upon by the insurance

company in the case of Satwant Kaur Sandhu vs. New India Assurance

Company Limited

5; Reliance Life Insurance Company Limited vs.

Rekhaben Nareshbhai Rathod

6 and Oriental Insurance Company

Limited vs. Mahendra Construction

7 will not come to its rescue for the

reason that in the aforesaid cases, the issue under consideration was

whether the repudiation of the claim by the insurance company on the

ground of concealment of fact at the time of purchase of policy was

valid or not. It was with reference to the period during which the policy

was valid. Examining the facts of the above-mentioned cases, this

Court opined that the repudiation of claim was legally sustainable. In

5

(2009) 8 SCC 316.

6

(2019) 6 SCC 175.

7

(2019) 18 SCC 209.

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the case in hand repudiation of claim was set aside & order was

accepted by the Insurance Company.

29. For the reasons mentioned above, the appeals are allowed.

The impugned order passed by the National Commission is set aside.

The orders passed by the District Forum and State Forum regarding

direction to the Insurance Company to renew the policies are restored.

Further, once there is a valid insurance policy available in favour of the

appellant, the claim made by him for reimbursement of the expenses

incurred is justifiable and deserves to be paid to him. Ordered

accordingly. There shall be no order as to costs.

_____________, J.

(Abhay S. Oka)

____________, J.

(Rajesh Bindal)

New Delhi

July 04, 2023.