B.V. Nagarathna J
1. This appeal assails order dated 22nd May, 2015, passed by the National Consumer Disputes Redressal Commission (hereinafter referred to as
“the Commission†for brevity) in Consumer Complaint No. 92/2010 by which the complaint filed by the appellant was dismissed.
2. The facts in a nutshell are that the appellant had sought an overseas mediclaim policy B (hereinafter referred to as “mediclaim policyâ€) as he
intended to travel to the United States of America (“USAâ€) to attend the wedding of his sisterÂinÂlaw’s daughter. The appellant was
medically examined at the instance of respondent No. 1 insurance company prior to the consideration of his request for issuance of a mediclaim
policy. On his medical examination, the report categorically noted that the appellant had diabetesÂtype II (also known as diabetes mellitus). No other
adverse medical condition was found.
3. In the medical exam report, a specific query was sought as to whether any abnormalities were observed in the electrocardiogram test of the
appellant. There was another query regarding any possible illness or disease for which the appellant may require medical treatment in the ensuing trip
to the USA. To both these queries, Dr. Jitendra Jain, the doctor who examined the appellant had answered “normal†and “no†respectively.
The representative of the respondent insurer on receipt of the medical reports assured the appellant that on verification of the same the policy would
be issued.
4. The insurer thereafter accepted the proposal form and issued the Overseas Mediclaim Business and Holiday Policy bearing Policy Number
190100/46/09/ 44/70000008 valid from 19th May, 2009 to 1st June, 2009, to the appellant. Thereafter, the appellant boarded a flight to San Francisco,
USA on 19th May, 2009 at around 1:00 a.m. from Delhi airport and reached San Francisco on the same day at around 2:00 p.m. (local time). On
exiting the customs section at San Francisco airport, appellant felt weak and started sweating. His wife got him admitted at the SFO Medical Centre
at San Francisco airport and after he received initial medical treatment, he was shifted to the Mills Peninsula Medical Centre (hereinafter referred to
as “Medical Centre†for the sake of brevity) where angioplasty was performed on the appellant on 19th May, 2009 and 22nd May and three
stents were inserted to remove the blockage from the heart vessels.
5. In order to avail the benefit under the mediclaim policy, appellant’s sonÂinÂlaw contacted M/s Corris International, a foreign collaborator of
respondent No. 1 and 2, which was to provide emergency assistance and claims administration services to the insured. M/s Corris International sought
certain documents regarding details of treatment given by the Medical Centre as well as details of the mediclaim policy for the purpose of considering
the same for indemnifying the appellant. The appellant was discharged on 24th May, 2009.
6. Two and a half months thereafter, appellant started receiving bills from the cardio vascular wing of the Medical Centre and SFO Medical Centre
towards the treatment he received at their facility. On 19th August, 2009, the appellant sent a letter annexing all bills in original as well as the
discharge summary to the Divisional Manager of respondent No. 1 at their Bhopal office. The same letter was also sent to respondent No. 2.
7. On 22nd August, 2009, appellant received a letter from respondent No. 2 stating that his claim had been repudiated as the appellant had a history of
hyperlipidaemia and diabetes and the policy did not cover perÂexisting conditions and complications arising therefrom. The said repudiation was with
regard to Bill No.1 i.e. the bill raised by the Medical Centre for USD 2,29,719. The appellant protested against the repudiation and requested his claim
to be settled on a priority basis as the Medical Centre and the other centre in the USA where he had taken treatment had started pressing for release
of payment. In this regard a representation was sent on 16th November, 2009. However, by its letter dated 9th April, 2010, respondent No.1 reiterated
its repudiation of the claim made by the appellant.
8. Being aggrieved, the appellant filed a complaint under Section 21(9) of the Consumer Protection Act, 1986 (hereinafter referred to as “Act†for
brevity) against the respondents, being Consumer Complaint No.92/2010 before the Commission. A reply was filed to the complaint by respondent
No.1 stating that appellant’s claim was rightly rejected by respondent No.2 on the ground of nonÂdisclosure of a preÂexisting disease as the
treatment report of the appellant showed prior medication such as statins, which is a lipid lowering medicine. The said reply was filed on 3rd March,
2011. Respondent No.2 also filed its reply on 27th April, 2011. Appellant filed his rejoinder to the replies of the respondents in August, 2011. Appellant
also filed an additional affidavit enclosing medical opinions of three doctors on affidavit stating that prescription of statins to a person having
diabetesÂtype II is by way of precaution and not because the patient would be suffering from any cardiovascular disease. Respondent No. 1 and 2
filed their evidence by way of affidavit and thereafter written submissions were filed by both sides. Subsequently, the Commission dismissed the
complaint filed by the appellant on the ground of nonÂdisclosure of material facts. Hence this appeal by the claimant.
9. Before proceeding further, it would be useful to encapsulate the reasoning of the Commission for dismissing the complaint filed by the appellant
herein, as under:
(i) The Commission concluded that the complainant had a history of hyperlipidaemia and pepticÂulcer disease in addition to diabetes mellitus. Since
this was disclosed by the complainant to medical authorities in the USA, the Commission found that there was no reason why he could not have
disclosed the condition to the respondent insurance company at the time of obtaining the mediclaim policy.
(ii) That statins are lipid lowering agents which are found beneficial in primary and secondary prevention of cardio vascular complications in
diabetics. Given that the complainant had admitted that he had been under statin medication, it was found that he had a preÂexisting disease of which
disclosure had not been made.
(iii) The Commission held that it was the duty of the complainant to have ensured that complete facts about his health condition were brought to the
knowledge of the insurance company at the time of obtaining the insurance policy. The complainant breached this duty of disclosure and acted in a
manner contrary to the principle of ‘uberima fides’ between the insurer and the insured.
(iv) Having regard to general condition 10 of the policy, the Commission found that for any sickness for which insured had sought advice or had taken
medical treatment even at the time of issuance of policy, the insured was not entitled to claim benefit under the policy owing to the “preÂexisting
exclusion†under the policy.
(v) The Commission held that concealment or nonÂdisclosure of material facts regarding preÂexisting heart ailment was a valid ground for
repudiation of the insurance claim by the respondent  Insurer.
10. We have heard Mr. Gopal Sankarnarayanan, learned Senior Counsel along with Ms. Zehra khan, learned counsel, for the appellant and Ms.
Sunaina Phul, learned counsel for respondent No.1 and perused the material on record.
11. Learned Senior Counsel for appellant submitted that the appellant was about 55 years of age when he and his wife travelled to San Francisco,
USA to attend the wedding of his sisterÂinÂlaw’s daughter. Appellant was issued overseas mediclaim policy by respondent No.1 after
undergoing the requisite medical tests namely: 1) Blood sugar test, 2) Urine examination 3) Electrocardiogram test. Dr. Jitendra Jain, Assistant
Professor in the Department of Medicine, Peoples’ Medical College, Bhopal, examined the appellant and answered the medical questionnaire as
provided in the proposal form. The mediclaim policy, issued to the appellant was for the period between 19th May, 2009 and 1st June, 2009 and was
subsequently extended to 21st June, 2009. The policy in question contained the nature of coverage and excluded preÂexisting conditions as defined in
general condition 10. That on boarding the flight to San Francisco from Delhi airport on 19th May, 2009, the appellant travelled in good health and was
fit on the flight. It is only on arrival at San Francisco airport that the appellant felt weak and was admitted to the SFO Medical Centre for preliminary
treatment and was later shifted to the Medical Centre. The appellant availed the treatment for which the charges were USD 2,41,932, approximately
Rs. 1,08,86,940 at Rs.45 per USD. Since the respondent insurer erroneously repudiated the claim made by the appellant, the consumer complaint was
filed before the Commission. The Commission by its order dated 22nd May, 2015, without appreciating the case of the appellant in its true perspective,
dismissed the complaint on the ground that appellant had not disclosed true and complete information about his health while taking the policy and
therefore the repudiation clause applied.
12. It was contended by learned Senior Counsel along with learned counsel for the appellant that the repudiation of the contract on the ground of
suppression of preÂexisting disease by appellant was wholly erroneous. Our attention was drawn to the fact that respondent No.1 had repudiated the
claim on the premise that the appellant was suffering from hyperlipidaemia at the time of seeking the insurance policy and in fact had been prescribed
statins, which fact had not been disclosed to the insurer. It was contended that the appellant had no knowledge that he was suffering from
hyperlipidaemia at the time of submission of the proposal form. The obligation to disclose any fact extends only when the said fact is known to the
appellant but not otherwise. In support of this submission, reliance was placed on Satwant Kaur Sandhu v. New India Assurance Co. Â (2009) 8 SCC
316. In fact, the proposal form itself stipulates that it should be completed to the best of the insured’s “knowledge and beliefâ€. The appellant
had stated that he was not suffering from hyperlipidaemia and that the same was diagnosed for the first time on 19th May, 2009 at the Medical Centre
in San Francisco. The doctor had noted “hyperlipidaemiaâ€, under the column “IMPRESSIONâ€, after examining the appellant on 21st May,
2009, but the same did not find a place under “discharge diagnosis†issued to the appellant on 24th May, 2009. There was no intention to suppress
any material fact by the appellant at the time of filling the proposal form as the appellant had no knowledge that he was suffering from hyperlipidaemia
as on 15th May, 2009, when the proposal form was filled by him.
13. It was next contended that the proposal form was worded in such a manner that there was no specific query which could have led to the appellant
disclosing that he was suffering from hyperlipidaemia. This argument was made as an alternative submission on the assumption that the appellant had
in fact knowledge that he was suffering from hyperlipidaemia at the time of filling up of proposal form seeking insurance policy.
14. It was further contended that the proposal form and the insurance policy did not define the terms “preÂexisting disease,†“pre existing
ailment,†“preÂexisting conditionâ€, “disease†or “illness.†That query number 2 of part 2 dealing with “medical history†in the
proposal form namely “have you ever suffered from any illness or disease up to the date of making this proposalâ€, was too vague and the
appellant left the column blank. Failure to fill in all the queries in the proposal form cannot be termed as suppression or misdeclaration vide Canara
Bank v. United India Insurance Co. Â (2020) 3 SCC 455.
15. Further, question number 5 which read, “Have you ever suffered from any illness or disease or had any accident prior to the first day of
insurance†is also overarching as no person can answer such a question in the negative. Every person to whom a mediclaim policy is offered, would
have, at some point of time, suffered from some disease or illness but for the same to be considered as a preÂexisting disease, ailment, condition or
illness on which ground a claim could be repudiated, there is need for a specific definition to be incorporated in the policy. This is because every
disease or illness cannot be considered as a preÂexisting disease or condition so as to exclude the benefit of the policy to a policy holder. According to
the learned Senior Counsel for the appellant, the nature of a disease or illness which would exclude a policy holder or an insured from the benefits of
the said policy must be clearly mentioned in the policy itself. The same cannot be vague or nonÂspecific so as to enable the insurer to interpret the
policy to its benefit whenever a claim is made under the mediclaim policy.
16. It was submitted that for an insurer to repudiate the policy it must establish suppression or a misrepresentation of material facts on the part of the
insured vide Oriental Insurance Co Ltd. v. Mahendra Construction  (2019) 18 SCC 209 and LIC of India v. Smt. G.M. Channabasamma  (1991) 1
SCC 357. In order to repudiate the policy, the insurance company was also required to prove the following:
(a) That the heart attack suffered by the appellant on 19th May, 2009 was caused by diabetes mellitusÂtype II and hyperlipidaemia,
(b) That hyperlipidaemia was a “preÂexisting condition,â€
(c) That this fact was known to the appellant and was suppressed by him at the time of filling up the proposal form, i.e. on 15th May, 2009.
17. Instead, respondent insurer only denied that the acute coronary syndrome for which the complainantÂappellant herein had to be treated at the
Medical Centre was a sudden and unexpected sickness. The respondents, on the other hand, found that a past history of diabetes mellitus and
hyperlipidaemia were the main causes for the cardiovascular ailment for which the insured was treated. In support of this stand, the insurer filed only
an affidavit of evidence of its panel doctor, Dr. P.R. Purandare, which merely opined “It is obvious that the insured was suffering from diabetes
mellitus and hyperlipidaemia. Also, he was taking medications for the same.â€
18. There was no evidence let in by the respondents to show that the preÂexisting condition of diabetes mellitus type II was the cause for the heart
attack suffered by the appellant on 19th May, 2009 or that the appellant had any preÂexisting heart related illness, disease or condition.
19. It was further urged that the appellant had filed discharge summary notes of the doctors at the Medical Centre where he was treated for the
period between 19th May, 2009 and 24th May, 2009 and a perusal of the said documents would indicate that the appellant was “without prior
coronary history.†That from the discharge summary notes per se, there can be no proof of the appellant suffering from hyperlipidaemia as on 15th
May, 2009 when he filled the proposal form or that the same was a preÂexisting condition. That in fact, the discharge summary indicated the
“discharge diagnosis†given to the appellant on 24th May, 2009 which only mentioned:
(a) Acute anterior wall myocardial infraction with congestive heart,
(b) DiabetesÂtype II.
20. That the respondent failed to prove that the heart attack suffered by the appellant on 19th May, 2009 was caused by diabetes mellitus type II
and hyperlipidaemia. That appellant had disclosed that he was a diabetic and was on medication and the tests done for the same showed good results.
It was submitted that the respondent further failed to prove that the appellant was suffering from hyperlipidaemia at the time of filling the proposal
form and had made a false representation and suppressed material facts.
21. Referring to the specific terms of the insurance policy, it was contented by the learned Senior Counsel for appellant that an insurance policy should
be given a purposive interpretation in favour of the insured appellant herein. The insurance policy and its components must be read as a whole and
given a meaning which furthers the expectations of parties and also of the realities of the insurance business vide Canara Bank v. United India
Insurance Co. Â (2020) 3 SCC 455. Further, the exemption of liability clauses in insurance contracts are to be construed contra proferentem, in favour
of the insured in case of ambiguity vide Sushilaben Indravadan Gandhi v. New India Assurance Co. Ltd. Â(2021) 7 SCC 151. Reliance was also
placed on Hari Om Agarwal v. Oriental Insurance Co. Â 2007 (98) DRJ 246 wherein the Delhi High Court found that repudiation of a claim towards
treatment for a heart attack on the ground of preÂexisting ailment of diabetes, which was disclosed, was illegal because the object of the insurance
policy was to “cater to medical expenses incurred by the assured†and therefore the exclusion clause could be overridden in light of the object.
22. It was contended by learned Senior Counsel for the appellant that the insurance company had failed to prove that the appellant had suppressed any
material fact which was in his knowledge at the time of filling the proposal form and that the heart attack suffered by the appellant on 19th May, 2009
arose “out of a preÂexisting condition†and was therefore outside the purview of the insurance policy.
23. As opposed to the aforesaid arguments, learned counsel for respondent No.1 supported the repudiation of the policy by the insurer and the
dismissal of the complaint by the Commission on grounds of misrepresentation and nonÂdisclosure of material facts in the proposal form, by the
appellant insured. It was submitted that had the appellant disclosed that he was suffering from hyperlipidaemia which was an existing disease as on
the date of the making of the proposal, the insurer may not have issued the mediclaim policy to him. The insured therefore did not disclose this vital
fact and had not answered the column related to illness or disease suffered by him up to the date of the filling up of the proposal form. It was
contended that there was a specific clause in the schedule of the policy under the heading “important†to the following effect :
“Notwithstanding anything stated in the policy, it is hereby agreed that all claims occasioned by, happening through or in consequence of any
disease which is existing on the date of commencement of risk, whether specifically declared or not, the proposal form completed by the insured, is
excluded from the scope of the policy.â€
24. It was also necessary that the policy form had to be completed disclosing all material facts and failure to do so could nullify the policy itself.
25. It was contended by learned counsel for respondent No. 1 that the medical history which was suppressed by the appellant in the proposal form
required to be filled up by him prior to the issuance of the policy, was in fact disclosed to the doctors in USA where he was given treatment, by stating
that he was prescribed statins which is for the purpose of controlling/treating hyperlipidaemia. In sum and substance, the submission was that the
nonÂdisclosure or the failure to disclose the past medical history relating to a preÂexisting medical condition in the proposal form was a good reason
to repudiate the policy. This aspect was rightly appreciated by the Commission and consequently the Commission dismissed appellant’s complaint,
which Order would not call for any interference in this appeal.
26. Learned counsel for the respective parties have relied upon certain judgments of this Court in support of their submissions, which shall be referred
to later.
Points for consideration
27. Having regard to the submissions of the learned Senior Counsel and learned counsel for the respective sides, the following points would arise for
our consideration:
(i) Whether the appellant herein had suppressed or not disclosed material facts in the proposal form which could have led the insurer to repudiate the
policy in question?
(ii) Whether the Commission was justified in dismissing the complaint?
(iii) What Order?
28. The fact that a policy namely, Overseas Mediclaim PolicyÂB, was issued by the respondent insurance company to the appellant is not in dispute.
The appellant intended to travel to USA to attend his sisterÂinÂlaw’s daughter’s wedding which was to take place in May, 2009.
Consequently, the appellant sought an overseas mediclaim policy. Dr. Jitendra Jain, the doctor who examined the appellant prior to issuance of the
policy noted as per Annexure AÂ2 that the appellant had diabetes mellitusÂII (DMÂ2) which was controlled on drugs. There was no mention of any
past history of any disease, operation, accident, investigation etc. An electrocardiogram test (ECG) was taken and the doctor noted the same as
“normal.†The doctor further noted that there was no current illness or disease which would possibly require medical treatment during the
proposer’s (appellant’s) forthcoming trip. The doctor did not recommend any stress test. It was also found that in the blood and urine tests of
the appellant there was no trace of sugar. The serum glucose/fasting test result showed 92%, which was well within the normal values i.e. between
70Â110 mgs %. The urine examination also did not reveal any abnormality. Thereafter the appellant was requested to fill up the proposal form.
29. Before we proceed, it is necessary to discuss two aspects of the matter which give rise to the controversy in the present appeal. The first is what
may be expressed in the legal maxim uberrimae fidei or the principle of good faith and the corresponding principle of disclosure of all material facts by
the parties to an insurance policy. The second principle is expressed in the contra proferentem rule.
Uberrimae Fidei
30. It is observed that insurance contracts are special contracts based on the general principles of full disclosure inasmuch as a person seeking
insurance is bound to disclose all material facts relating to the risk involved. Law demands a higher standard of good faith in matters of insurance
contracts which is expressed in the legal maxim uberrimae fidei.
31. Mac Gillivray on insurance law 13th Ed. has summarised the duty of an insured 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 nonÂdisclosure induced the making of the contract on the relevant terms.â€
32. Lord Mansfield in Carter v. Boehm (1766) 3 Burr 1905 has summarised the principles necessitating 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 representation, and proceeds upon 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 risk run is really different from the risk 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 from his ignorance of the fact, and his
believing the contrary.â€
The aforesaid principles would apply having regard to the nature of policy under consideration, as what is necessary to be disclosed are “material
facts†which phrase is not definable as such, as the same would depend upon the nature and extent of coverage of risk under a particular type of
policy. In simple terms, it could be understood that any fact which has a bearing on the very foundation of the contract of insurance and the risk to be
covered under the policy would be a “material factâ€.
33. Under the provisions of Insurance Regulatory and Development Authority (Protection of Policyholders’ Interests) Regulations,2002 the
explanation to Section 2 (d) defining “proposal form†throws light on what is the meaning and content of “material.†For an easy reference
the definition of “proposal form†along with the explanation under the aforesaid Regulations has been extracted as under:
“2. Definitions.ÂÂIn these regulations, unless the context otherwise requiresÂ
(d) ""Proposal Form"" means 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.
Explanation: ""Material"" for the purpose of these regulations shall mean and include all important, essential and relevant information in the
context of underwriting the risk to be covered by the insurer.â€
Thus, the Regulation also defines the word ""material"" to mean and include all ""important"", ""essential"" and ""relevant"" information in the context of
guiding the insurer in deciding whether to undertake the risk or not.
34. Just as the insured has a duty to disclose all material facts, the insurer must also inform the insured about the terms and conditions of the policy
that is going to be issued to him and must strictly conform to the statements in the proposal form or prospectus, or those made through his agents.
Thus, the principle of utmost good faith imposes meaningful reciprocal duties owed by the insured to the insurer and vice versa. This inherent duty of
disclosure was a common law duty of good faith originally founded in equity but has later been statutorily recognised as noted above. It is also open to
the parties entering into a contract to extend the duty or restrict it by the terms of the contract.
35. The duty of the insured to observe utmost good faith is enforced by requiring him to respond to a proposal form which is so framed to seek all
relevant information to be incorporated in the policy and to make it the basis of a contract. The contractual duty so imposed is that any suppression or
falsity in the statements in the proposal form would result in a breach of duty of good faith and would render the policy voidable and consequently
repudiate it at the instance of the insurer.
36. In relation to the duty of disclosure on the insured, any fact which would influence the judgment of a prudent insurer and not a particular insurer is
a material fact. The test is, whether, the circumstances in question would influence the prudent insurer and not whether it might influence him vide
Reynolds v. Phoenix Assurance Co. Ltd. (1978) 2 Lloyd’s Rep. 440. Hence the test is to be of a prudent insurer while issuing a policy of
insurance.
37. The basic test hinges on whether the mind of a prudent insurer would be affected, either in deciding whether to take the risk at all or in fixing the
premium, by knowledge of a particular fact if it had been disclosed. Therefore, the fact must be one affecting the risk. If it has no bearing on the risk it
need not be disclosed and if it would do no more than cause insurers to make inquiries delaying issue of the insurance, it is not material if the result of
the inquiries would have no effect on a prudent insurer.
38. Whether a fact is material will depend on the circumstances, as proved by evidence, of the particular case. It is for the court to rule as a matter of
law, whether, a particular fact is capable of being material and to give directions as to the test to be applied. Rules of universal application are not
therefore to be expected, but the propositions set out in the following paragraphs are well established :
(a) Any fact is material which leads to the inference, in the circumstances of the particular case, that the subject matter of insurance is not an ordinary
risk, but is exceptionally liable to be affected by the peril insured against. This is referred to as the ‘physical hazardâ€.
(b) Any fact is material which leads to the inference that the particular proposer is a person, or one of a class of persons, whose proposal for
insurance ought to be subjected at all or accepted at a normal rate. This is usually referred to as the ‘moral hazard’.
The materiality of a particular fact is determined by the circumstances of each case and is a question of fact.
39. If a fact, although material, is one which the proposer did not and could not in the particular circumstances have been expected to know, or if its
materiality would not have been apparent to a reasonable man, his failure to disclose it is not a breach of his duty.
40. Full disclosure must be made of all relevant facts and matters that have occurred up to the time at which there is a concluded contract. It follows
from this principle that the materiality of a particular fact is determined by the circumstances existing at the time when it ought to have been disclosed,
and not by the events which may subsequently transpire. The duty to make full disclosure continues to apply throughout negotiations for the contract
but it comes to an end when the contract is concluded; therefore, material facts which come to the proposer’s knowledge subsequently need not
be disclosed.
41. Thus, a proposer is under a duty to disclose to the insurer all material facts as are within his knowledge. The proposer is presumed to know all the
facts and circumstances concerning the proposed insurance. Whilst the proposer can only disclose what is known to him, the proposer’s duty of
disclosure is not confined to his actual knowledge, it also extends to those material facts which, in the ordinary course of business, he ought to know.
However, the assured is not under a duty to disclose facts which he did not know and which he could not reasonably be expected to know at the
material time. The second aspect of the duty of good faith arises in relation to representations made during the course of negotiations, and for this
purpose all statements in relation to material facts made by the proposer during the course of negotiations for the contract constitute representations
and must be made in good faith.
42. The basic rules to be observed in making a proposal for insurance may be summarized as follows :
(a) A fair and reasonable construction must be put upon the language of the question which is asked, and the answer given will be similarly construed.
This involves close attention to the language used in either case, as the question may be so framed that an unqualified answer amounts to an assertion
by the proposer that he has knowledge of the facts and that the knowledge is being imparted. However, provided these canons are observed,
accuracy in all matters of substance will suffice and misstatements or omissions in trifling and insubstantial respects will be ignored.
(b) Carelessness is no excuse, unless the error is so obvious that no one could be regarded as misled. If the proposer puts ‘no’ when he means
‘yes’ it will not avail him to say it was a slip of the pen; the answer is plainly the reverse of the truth.
(c) An answer which is literally accurate, so far as it extends, will not suffice if it is misleading by reason of what is not stated. It may be quite
accurate for the proposer to state that he has made a claim previously on an insurance company, but the answer is untrue if in fact he has made more
than one.
(d) Where the space for an answer is left blank, leaving the question unÂanswered, the reasonable inference may be that there is nothing to enter as
an answer. If in fact there is something to enter as an answer, the insurers are misled in that their reasonable inference is belied. It will then be a
matter of construction whether this is a mere nonÂdisclosure, the proposer having made no positive statement at all, or whether in substance he is to
be regarded as having asserted that there is in fact nothing to state.
(e) Where an answer is unsatisfactory, as being on the face of it incomplete or inconsistent the insurers may, as reasonable men, be regarded as put
on inquiry, so that if they issue a policy without any further enquiry they are assumed to have waived any further information. However, having regard
to the inference mentioned in head (4) above, the mere leaving of a blank space will not normally be regarded as sufficient to put the insurers on
inquiry.
(f) A proposer may find it convenient to bracket together two or more questions and give a composite answer. There is no objection to his doing so,
provided the insurers are given adequate and accurate information on all points covered by the questions.
(g) Any answer given, however accurate and honest at the time it was written down, must be corrected if, up to the time of acceptance of the
proposal, any event or circumstance supervenes to make it inaccurate or misleading.
[Source : Halsbury’s Laws of England, Fourth Edition, Para 375, Vol.25 : Insurance]
43. Sometimes the standard of duty of disclosure imposed on the insured could make the insured vulnerable as the statements in the proposal form
could be held against the insured. Conversely, certain clauses in the policy of insurance could be interpreted in light of the contra proferentem rule as
against the insurer. In order to seek specific information from the insured, the proposal form must have specific questions so as obtain clarity as to the
underlying risks in the policy, which are greater than the normal risks.
Contra Proferentem Rule
44. The Contra Proferentem Rule has an ancient genesis. When words are to be construed, resulting in two alternative interpretations then, the
interpretation which is against the person using or drafting the words or expressions which have given rise to the difficulty in construction, applies. This
Rule is often invoked while interpreting standard form contracts. Such contracts heavily comprise of forms with printed terms which are invariably
used for the same kind of contracts. Also, such contracts are harshly worded against individuals and not read and understood most often, resulting in
grave legal implications. When such standard form contracts ordinarily contain exception clauses, they are invariably construed contra proferentem
rule against the person who has drafted the same.
45. Some of the judgments which have considered the contra proferentem rule are referred to as under :
a) In General Assurance Society Ltd., v. Chandmull Jain  AIR 1966 SC 1644, it was held that where there is an ambiguity in the contract of
insurance or doubt, it has to be construed contra proferentem against the Insurance Company.
b) In Delhi Development Authority v. Durga Chand Kaushish  AIR 1973 SC 2609, it was observed:
In construing a document one must have regard, not to the presumed intention of the parties, but to the meaning of the words they have used. If two
interpretations of the document are possible, the one which would give effect and meaning to all its parts should be adopted and for the purpose, the
words creating uncertainty in the document can be ignored.
c) Further, in Central Bank of India v. Hartford Fire Insurance Co. Ltd. AIR 1965 SC 1288, it was held:
What is called the contra proferentem rule should be applied and as the policy was in a standard form contract prepared by the insurer
alone, it should be interpreted in a way that would be favourable to the assured.
d) In Md. Kamgarh Shah v. Jagdish Chandra AIR 1960 SC 953, it was observed that where there is an ambiguity it is the duty of the court to look at
all the parts of the document to ascertain what was really intended by the parties. But even here the rule has to be borne in mind that the document
being the grantor's document it has to be interpreted strictly against him and in favour of the grantee.
e) In United India Insurance Co. Ltd. v. Orient Treasures (P) (2016) 3 SCC 49 this Court quoted Halsbury’s laws of England (5th Ed. Vol. 60,
Para 105) on the Contra Proferentem rule as under :
“Contra proferentem rule.ÂWhere there is ambiguity in the policy the court will apply the contra proferentem rule. Where a policy is
produced by the insurers, it is their business to see that precision and clarity are attained and, if they fail to do so, the ambiguity will be
resolved by adopting the construction favourable to the insured. Similarly, as regards language which emanates from the insured, such as
the language used in answer to questions in the proposal or in a slip, a construction favourable to the insurers will prevail if the insured
has created any ambiguity. This rule, however, only becomes operative where the words are truly ambiguous; it is a Rule for resolving
ambiguity and it cannot be invoked with a view to creating a doubt. Therefore, where the words used are free from ambiguity in the sense
that, fairly and reasonably construed, they admit of only one meaning, the Rule has no application.â€
f) Learned counsel for the appellant have relied upon Sushilaben Indravadan Gandhi and Ors. v. The New India Assurance Co. Ltd. and Ors. (2021)
7 SCC 151 wherein it was observed that any exemption of liability clause in an insurance contract must be construed, in case of ambiguity, contra
proferentem against the insurer. In the said case reliance was placed on Export Credit Guarantee Society v. Garg Sons International (2014) 1 SCC
686 wherein this court held as under:
“The insured cannot claim anything more than what is covered by the insurance policy. ""The terms of the contract have to be construed
strictly, without altering the nature of the contract as the same may affect the interests of the parties adversely."" The clauses of an insurance
policy have to be read as they are. Consequently, the terms of the insurance policy, that fix the responsibility of the insurance company must
also be read strictly. The contract must be read as a whole and every attempt should be made to harmonise the terms thereof, keeping in
mind that the Rule of contra proferentem does not apply in case of commercial contract, for the reason that a Clause in a commercial
contract is bilateral and has mutually been agreed upon.â€
46. Delving on the facts of the case and on consideration of IMTÂ5 and IMTÂ16 of the comprehensive private car (B) policy with regard to the
limitation of liability clause, it was observed that the contra proferentem rule applies in case of real ambiguity and if on a reading of the whole policy
the meaning of the clauses of a contract are clear there is no room for the application of the doctrine. On the facts of the said case, the appeal was
allowed by holding that the insurance company was liable to pay the entire amount claimed. The said case arose from an appeal against the order of
the High Court of Gujarat wherein the Court had directed that the liability of the insurer shall be limited to a sum of Rs. 25,000/Â and the remaining
claim amount shall be payable by the employer (hospital) of the deceased. Ambiguity arising with regard to the interpretation of the term
‘employee’ as appearing in the limitation of liability clause in the insurance contract was construed contra proferentem against the insurance
company by holding that the deceased was not an employee of the hospital and that therefore, the entire liability would lie upon the insurer. This Court,
therefore, required the insurer therein to pay the entire claim amount to the wife of the deceased.
47. MacGillivray on Insurance Law (9th Ed., Sweet and Maxwell London, 1997 at p. 280) deals with the rule of Contra Proferentem as under:
“The contra proferentem Rule of construction arises only where there is a wording employed by those drafting the Clause which leaves
the court unable to decide by ordinary principles of interpretation which of two meanings is the right one. 'One must not use the Rule to
create the ambiguity  one must find the ambiguity first.' The words should receive their ordinary and natural meaning unless that is
displaced by a real ambiguity either appearing on the face of the policy or, possibly, by extrinsic evidence of surrounding circumstances.â€
48. Colinvaux’s Law of Insurance (6th Ed., 1990 at p. 42) has elucidated on the said rule in the following words:
“Quite apart from contradictory clauses in policies, ambiguities are common in them and it is often very uncertain what the parties to
them mean. In such cases the Rule is that the policy, being drafted in language chosen by the insurers, must be taken most strongly against
them. It is construed contra proferentem, against those who offer it. In a doubtful case the turn of the scale ought to be given against the
speaker, because he has not clearly and fully expressed himself. Nothing is easier than for the insurers to express themselves in plain terms.
The assured cannot put his own meaning upon a policy, but, where it is ambiguous, it is to be construed in the sense in which he might
reasonably have understood it. If the insurers wish to escape liability under given circumstances, they must use words admitting of no
possible doubt.â€
49. The aforesaid principles could be applied to the present case having regard to the nature of the policy in question i.e. a mediclaim policy, the
specific queries in the proposal form and the answers thereto given by the appellant in the context of the general and specific clauses therein.
50. But before entering upon the factual controversy in the instant case, it would be useful to discuss the relevant judgments cited at the Bar :
(i) Learned Senior Counsel for appellant have relied upon the following judgments in support of the claim of the appellant :Â
a) Satwant Kaur Sandhu v. New India Assurance Co. (2009) 8 SCC 316 :
In the said case the husband of the appellant therein had taken a mediclaim policy provided by the respondent insurer therein for the period from 7th
May, 1990 to 6th May, 1991. The appellant therein suddenly fell ill and was admitted to a hospital in Ludhiana and thereafter to a health centre in
Chennai where his condition deteriorated ultimately leading to his death on 26th December, 1990. The insurance company therein was informed about
his death and a claim for reimbursement was made. The respondent insurer therein made inquiries from Madras Institute of Nephrology (Health
Centre) and obtained a certificate dated 6th May, 1992, stating that the deceased was a known case of “chronic renal failure/diabetic
nephropathy†and that the complainant was on regular haemodialysis at his place leading to his death. The insurance company therein repudiated the
claim. The core question considered by this Court in the said case was whether the fact that the policy holder was suffering from chronic diabetes and
renal failure at the time of taking out the mediclaim policy was a material fact and therefore, on account of nonÂdisclosure of this fact in the proposal
form, the respondent Insurance Company was justified in law in repudiating the claim of the appellant therein.
This Court dealt with the concept of material fact and observed at para 20 as under:
“20. The upshot of the entire discussion is that in a Contract of Insurance, any fact which would influence the mind of a prudent insurer
in deciding whether to accept or not to accept the risk is a ""material fact"". If the proposer has knowledge of such fact, he is obliged to
disclose it particularly while answering questions in the proposal form. Needless to emphasise that any inaccurate answer will entitle the
insurer to repudiate his liability because there is clear presumption that any information sought for in the proposal form is material for the
purpose of entering into a Contract of Insurance.â€
Ultimately this Court held as under:
“21. Bearing in mind the aforestated legal position, we may advert to the facts in hand.
As noted earlier, the proposal form contained the following two questions:
Details of illness which may require treatment in the near future;
Details of treatment/surgical operation in the last two months.
Answers given by the proposer to the two questions were ""Sound Health"" and ""Nil"" respectively. It would be beyond anybody's comprehension that
the insured was not aware of the state of his health and the fact that he was suffering from diabetes as also chronic Renal failure, more so when he
was stated to be on regular haemodialysis. There can hardly be any scope for doubt that the information required in the afore extracted questions
was on material facts and answers given to those questions were definitely factors which would have influenced and guided the respondent Â‐
Insurance Company to enter into the Contract of Mediclaim Insurance with the insured.â€
Learned counsel for the respondent insurer has also relied upon Satwant Kaur Sandhu supra and has emphasised on para 20 of the said judgment
extracted above.
It was observed that there was clear suppression of material facts relating to the health of the insured and that therefore, the respondent insurer was
fully justified in repudiating the insurance contract. But the aforesaid judgment is sought to be distinguished by learned counsel for appellant.
(b) In LIC of India v. Smt. G.M. Channabasemma (1991) 1 SCC 357, it was observed that there is an obligation upon the assured to disclose all
material facts which may be relevant to the insurer but after issuing a policy, the burden of proving that the insured had made false representations
and suppressed material facts is on the insurer. In the said case, it was held that the physician’s statement did not lead to a conclusion that the
respondent therein was influenced by a serious disease for a long time. On consideration of the evidence led by the parties therein, it was observed
that the insurer had failed to prove that the insured was suffering from diabetes or tuberculosis at the time of filling up the proposals for the policies or
that he had given any false answer in his statements or suppressed any material fact which he was under a duty to disclose. The finding of the Trial
Court that the assured had committed fraud on the insurer while taking out the policies was reversed and the appeal was allowed.
(c) Canara Bank v. United India Insurance Co. (2020) 3 SCC 455, is a case in which this Court held that if a column is left blank, the insurance
company should ask the insured to fill up the column. If the insurance company while accepting the proposal form does not ask the insured to clarify
any ambiguity then the insurance company after accepting premium cannot urge that there was a wrong declaration made by the insured. Leaving out
a column blank does not mean that there was a misdescription of facts. To make a contract void, the nonÂdisclosure should be of some very material
fact. Therefore, the insurer therein was directed to indemnify the insured in the case. The judgment in Satwant Kaur Sandhu (supra) was distinguished
and held not applicable in this case.
d) Hari Om Agarwal v. Oriental Insurance Co. 2007 (98) DRJ 246, is a decision on a mediclaim policy. In the said case, it was held that the insured
had suffered from diabetes as well as hypertension at the time of submission of the proposal. The insured was advised to undergo ECG which he did.
Thereafter, the proposal was accepted and the cover note was issued. Clause 4.1 of the policy therein came up for interpretation. It was observed
that hypertension and diabetes could lead to a host of ailments such as stroke, cardiac disease, renal failure, liver disorder, depending upon various
factors. Such ailments can equally arise in nonÂdiabetics and those without hypertension. Giving a contextual interpretation to clause 4.1 of the policy,
it was observed that such an interpretation was necessary to avoid rendering a medical cover meaningless. Hence the main purpose rule was pressed
into service by holding that clause 4.1 of the said policy could not be used to override the primary liability of the insurer.
(ii) The following citations were relied upon by learned counsel for respondent No. 1 in support of validity of the repudiation of the insurance claim:
a) Reliance Life Insurance v. Rekhaben Nareshbhai Rathod, (2019) 6 SCC 175, is a case where the insured therein, while seeking a life insurance
policy failed to disclose in the proposal form that he had earlier obtained another insurance cover for his life, two months before obtaining the policy in
question. The spouse of the assured therein submitted a claim under the terms of the policy after the death of the assured. The insurance company
repudiated the claim on the ground of nonÂdisclosure of the fact that insured had taken out another policy to insure his life before obtaining the policy
in question. The State Commission found that the repudiation of claim was unjustified as the omission of the insured to disclose a previous policy of
insurance would not have influenced the mind of a prudent insurer. The National Commission affirmed the findings of the State Commission. In an
appeal before this Court, the decision of the National Commission was reversed and the Court allowed the claim to be repudiated by the insurer. It
was held that the disclosure of the earlier cover was material to an assessment of the risk which was being undertaken by the insurer. The duty of full
disclosure required that no information of substance or interest to the insurer be omitted or concealed.
b) In Life Insurance Corporation of India v. Manish Gupta, (2019) 11 SCC 371, the respondent therein had obtained a mediclaim policy from the
appellant insurer. The proposal form sought disclosure of health details and medical information of the assured. With regard to the query as to whether
the proposer/assured had suffered from any “cardioÂvascular disease e.g. palpitations, heart attack, stroke, chest pain,†the assured answered in
the negative. The assured underwent a mitral valve replacement surgery. A claim for treatment expenses was made by the hospital where treatment
was administered and the said claim was repudiated by the insurer on the ground of non disclosure of preÂexisting cardiac condition. An appeal filed
before this Court was allowed. This Court, on consideration of documentary material placed before it found that the discharge card of the assured
recorded his history of “rheumatic heart disease since childhood.†This Court therefore allowed the repudiation of claim by the insurer on the
ground that the assured had failed to disclose, at the time of seeking the mediclaim policy, that he had suffered from rheumatic heart disease since
childhood.
51. We have also considered the following judgments :
c) In Branch Manager Bajaj Allianz Life Insurance Co. v. Dalbir Kaur  AIR 2020 SC 5210, a proposal form was submitted to the appellant therein
for a life insurance policy containing questions pertaining to the health and medical history of the proposer and required a specific disclosure as to
whether the proposer had undergone any treatment. The proposer answered the queries in the negative. Further a query regarding specific diseases or
disorders suffered was also responded to in the negative. A policy of insurance was issued by the insurer on 12th August, 2014, insuring the life of the
proposer for a sum of Rs. 8.50 lakhs payable on maturity with the death benefit of Rs. 17 lakhs. On 12th September, 2014, the insured, Kulwant Singh,
died giving rise to a claim under the policy. The claim was subjected to an independent investigation and the records revealed that the deceased had
been suffering from hepatitis C. The claim was repudiated giving rise to a consumer complaint which was allowed by the District Forum. The appeal
before the State Forum was also dismissed, so also by the National Commission, the revision was dismissed. Being aggrieved the insurance company
had preferred an appeal before this Court. It was held that the investigation conducted by the insurer in the said case clearly indicated that the
deceased was suffering from a preÂexisting medical condition which was not disclosed to the insurer despite specific queries relating to any ailment,
hospitalisation or treatment undergone by the proposer in column 22 of the proposal form therein. Hence the judgment of the Commission was set
aside but since the claim amount was paid to the respondent, exercising jurisdiction under Article 142 of the Constitution it was directed that no
recoveries be made by the respondent insurer therein.
In the aforesaid judgment, this Court distinguished Sulbha Prakash Motegaonkar and Ors. v. Life Insurance Corporation of India, Civil Appeal No.
8245/2015 decided on 5th October, 2015, by holding that in the said case the assured therein suffered myocardial infraction and succumbed to it. The
UNITED INDIA INSURANCE COMPANY LIMITED
Regd. & Head Office United India House 24, Whites Road,
CHENNAIÂ600 014
PROPOSAL FORM FOR OVERSEAS MEDICLAIM POLICYÂB
(Business & Holiday)
(To be submitted in Original with 2 Copies)
(Available to persons in the age group of 6 months to 70 years)
IMPORTANT
PLEASE MAKE SURE YOU READ AND FULLY UNDERST
THIS DOCUMENT BEFORE YOU TRAVEL FROM
REPUBLIC OF INDIA
FAILURE TO FOLLOW THE INSTRUCTION GIVEN CO
RESULT IN REJECTION OF ANY CLAIM THAT MIGHT
MADE
THE OVERSEAS MEDICLAIM POLICY PROVIDES INDEM
FOR EXPENSES NECESSARILY INCURRED FOR IMMED
TREATMENT OF ILLNESS, DISEASECSO NTRACTED O
INJURY FIRST SUSTAINED (DURING THE PERIOD
INSURANCE OF OVERSEATSR AVEL SUBJECT TO POLIC
TERMS & CONDITIONS) AND IN ADDITION ALSO PERSO
ACCIDENT TOTAL LOSS OF CHECKED BAGGAGE, DELAY
CHECKED BAGGAGE, LOSS OF PASSPOARTN D PERSONA
LIABILITY COVERS (DURING THE PERIOD OF INSURANCE OF
OVERSEAS TRAVELS UBJECT TO POLICY TERMS
CONDITIONS).
IN THE ABSENCE OF MEDICAL REPORTS AS SPECIFIED IN
ITEM II B SUM INSURED WILL STAND REDUCTEOD AN
EQUIVALENT AMOUNT OF US $ 10,000 IN RESPECT
MEDICAL EXPENSES INCURRETDH ROUGH ILLNESS O
DISEASE ONLY, SUBJECT TO EXCLUSION OF PREÂEXIS
DISEASE.
THE ATTENTION OF THE PROPOSER IS DRAWN ITTOE M I
(MEDICAL HISTORY) OF THE PROPOSAL FORM ESPECIA
IN RELATION TO PREVIOUTSR EATMENT FOR ILLNESS
DISEASE SUCH AS RENAL DISORDERS, OR DISE
CEREBRAL OR VASCULAR STROKES, HEART AILMENT
ANY KIND, MALIGNANCY, TUBERCULOSEENS,C EPHALITIS,
NEUROLOGICAL DISORDERS, GALL BLADDER DISOR
ARTHRITIS REQUIRINSGU RGERY AND IF ANY TREATME
HAS BEEN RECEIVED FOR ANY OF THE ABOVE DISOR
AT ANY TIME IN THE PAST, SUCH TREATMENT MUST
DISCLOSED TO THE POLICY ISSUING OFFICE.
NEITHER THE INSURERS NOR CLAIMS SETTLAINGGEN TS
SHALL BE RESPONSIBLE FOR THE AVAILABILITY, QUA
OR RESULTS OF ANY MEDICAL TREATMENT OR THE
FAILURE OF THE INSURED TO OBTAIN MED
TREATMENT.
THE PROPOSAL FORM SHOULD BE COMPLETED TTHOE
BEST OF YOUR KNOWLEDGE & BELIEF & ALL MATER
FACTS SHOULD BE DISCLOSED FAILURE TO DO SO MAY
NULLIFY COVER UNDER THE POLICY ISSUED.
NOTE: Plan AÂ1, AÂ27, AÂ3 (Worldwide travele xcluding
USA/Canada)
Plan BÂ1, BÂ2, BÂ3 & BÂ4 (Worldwide travel including USA/Canada)
Plan EÂ1 & EÂ2 (Corporate Frequent Travel to all destinations
including USA/Canada)
IF
a) The proposer is travelling to USA &/or Canada & is
above 40 years, OR
b) The proposer is travelling to any other country and is
above 60 years, OR
c) Answer to questions in II(A) reveal that the proposer had suffered any
time the past or is suffering from any
disease/illness.
The Proposal form should be accompanied with 1) ECG printout with
report & 2) fasting blood sugar & urine sugar urine strip test report of
any other medical report required by the company etc. along with the
attached questionnaire II(B) to be completed & signed by the doctor with
minimum M.D. qualification conducting the test. In the absence of such
medical tests & reports due to a shortage of time before travel, cover
may still be granted subject to a satisfactory proposal form by the sum
insured under policy, in respect of expenses incurred for the treatment of
illness disease shall be restricted to US $ 10,000 only, which shall not
cover the cost of Medical treatment for
preÂexisting disease. In case of accident however the full sum insured
benefit would be available.
56. It was contended that there was nonÂdisclosure or suppression of the fact that the appellant had been advised to take statins owing to a
cholesterol problem, which is a riskÂfactor for cardiac disease and this fact was not disclosed in the proposal form whereas it was mentioned to the
doctor who treated the appellant in USA. Hence the repudiation of the policy was justified.
57. We have considered the aforesaid submissions in light of the relevant clauses in the proposal form and by taking into consideration the arguments
of the learned Senior Counsel for the appellant.
58. On a reading of the queries pertaining to medical history it is noted as under:
(i) Query no. 1 which reads, “are you in good health and free from physical and mental disease and infirmity?†The answer given was “yes.â€
This indicates the current status of health at the time of filling up of the proposal form.
(ii) On the other hand, query no. 2 which reads “have you ever suffered from any illness or disease up to the date of making this proposal?â€, is a
query with regard to the past health condition of the insured.
(iii) The above is discerned from query no. 4 which reads, “have you ever been admitted to any hospital, nursing home/clinic for treatment or
observation?â€
(iv) Query no. 5 which reads, “have you suffered from any illness or disease or had an accident prior to the first day of insurance?â€
59. On a contextual and conjoint reading of the aforesaid queries it is evident that the object of seeking answers from a proposer to the aforesaid
queries was, as a prudent insurer to discern whether the proposer had any preÂexisting condition for which he had taken medical advice or medical
treatment in the 12 months preceding the commencement of travel. Any disclosure of an illness or disease suffered/diagnosed in 12 months preceding
the commencement of travel would indicate a preÂexisting condition which fact may lead a prudent insurer not to provide an indemnity in respect of
medical services, the need for which may arise during the term of the mediclaim policy or lead the insurer to reduce the scope and coverage of risk
under the policy.
60. In the instant case, since the appellant herein answered query no. 1 in the affirmative and query no. 4 and 5 in the negative it implies that he did
not suffer from any illness or disease up to the date of making his proposal apart from what had been disclosed by him, namely diabetes mellitusÂII.
The respondent insurer being appraised about the said medical condition of the appellant, issued policy to the appellant herein. The respondent insurer
did not consider the said medical condition of the appellant as a risk factor for any possible cardiac ailment during the term of the policy so as to
decline acceptance of the proposal form and issuance of the mediclaim policy. Also, report of the ECG was considered by one of the panel doctors of
respondentÂinsurer and having found the same to be normal, the policy was issued to the appellant.
61. That apart, query no. 8 in the policy is worded in following terms:
“Please give details of any knowledge of any positive existence of any ailment, sickness or injury which may require medical attention
whist on tour abroad.â€
The answer to the same was “NIL.â€
62. In support of the aforesaid answer, the submission of learned Senior Counsel along with learned counsel for appellant was that ECG report and
blood and urine test reports were given as the appellant had knowledge of his ailment, namely, diabetes mellitusÂII and the same were taken into
consideration favourably by the insurer as the said reports showed normal results. It was contended by learned Senior Counsel for the appellant that
the appellant had no knowledge of any heart ailment which could require medical attention whilst on tour abroad.
63. It was further submitted that the appellant was on statins and the same was prescribed to him as diabetes mellitusÂII which was disclosed by the
appellant in the proposal form is one of the risk factors for cardiac disease. Thus, in order to reduce the risk of a cardiac ailment in future, statins were
prescribed. The same is also prescribed for controlling hyperlipidaemia but the appellant did not suffer from any heart ailment or hyperlipidaemia.
64. We find considerable force in the argument made on behalf of the appellant. This is because while diabetes mellitusÂII is a risk factor for a
cardiac ailment in a person, it is not a hard and fast rule that every person having diabetes mellitusÂII would necessarily suffer from a cardiac
disease. Conversely, a person who does not suffer from diabetes mellitusÂII can also suffer from a cardiac ailment. Thus, what the appellant had
knowledge of was the existence of diabetes mellitus II, for which he was under treatment. In order to disclose the status of the said disease he had
submitted his ECG report, blood and urine test reports which showed normal results. The fact that ECG report showed normal parameters would
indicate that the appellant had no cardiac disease. The prescription of statins to the appellant was only as a precaution to prevent a possible cardiac
ailment from developing in the future as diabetes mellitusÂII is a risk factor for such a disease. But by that, it cannot be deduced or inferred that
because the appellant had a cardiac ailment or hyperlipidaemia, he was prescribed statins.
65. Further, what was required to be disclosed in query no. 8 under the caption medical history was “Knowledge of any positive existence of any
ailment, sickness or injury which may require medical attention whist on tour abroadâ€
This means that any ailment, sickness or injury of which the proposer had positive knowledge of, and which may require imminent medical attention
whilst on tour abroad and during the term of the policy had to be disclosed. If the proposer had no knowledge of any ailment he had, obviously there
could be no disclosure of any ailment or sickness which would require medical attention whilst on tour abroad. In fact, the aforesaid query has also to
be considered in the context of the further declaration sought by the insurance company to the effect that the proposer was:
(a) not travelling against the advice of a physician,
(b) not on the waiting list of any medical treatment,
(c) not travelling for the purpose of receiving medical treatment,
(d) not received a terminal prognosis for a medical condition before the date of submitting the proposal form.
66. Viewed in the aforesaid perspective, it is held that the respondent insurance company could not have repudiated the policy on the ground that
acute myocardial infraction suffered by the appellant on landing at San Francisco, USA was a “preÂexisting and related complication†which was
excluded under the policy. The insurer was informed about the preÂexisting condition of the appellant, namely, diabetes mallitusÂII and it was for
insurer to gauge a related complication under the policy as a prudent insurer and then issue the policy when satisfied. In the absence of the same, the
treatment availed by the appellant for acute myocardial infraction in USA could not have been termed as a direct offshoot of hyperlipidaemia and
diabetes mellitus so as to be labelled as a pre existing disease or illness which the appellant suffered from and had not disclosed the same. At any
rate, the appellant had in the proposal form disclosed that he was suffering from diabetes mellitusÂII and for which the medical test reports were
submitted along with the proposal form which were considered by the insurance company before the policy was issued to the appellant. In fact, the
appellant stated in his representation dated 16th November, 2009, against the repudiation of the policy that he was taking lipidÂlowering medicines not
because he was suffering from hyperlipidaemia but as it was customary to take such medication for prevention of cardioÂvascular complications in
diabetics. He also stated that he had informed the physician, Dr. Jitendra Jain, who examined him prior to obtaining the policy, of the medicines he had
been taking. Therefore, the insurance company was well aware of the fact that the insured was a diabetic and was taking all necessary medication for
preventing further complications and controlling the disease. Hence in our view, there was no suppression of any material fact by the appellant to the
insurer.
67. Further on the disclosures made by the appellant with regard to his existing disease, namely diabetes mellitusÂII, the insurance company
considered the same and issued the policy in question to the appellant. The respondent insurance company as a prudent insurer considered the details
given by the appellant in the proposal form and issued the policy. The insurance company did not think that the medical and health condition of the
appellant was such which did not warrant issuance of a mediclaim policy. The insurance company therefore did not decline the proposal of the
assured as a prudent insurer.
68. Therefore, the respondents were not right in stating that as per the terms and conditions of the policy “all the complications arising out of preÂ‐
existing condition is not payable.†As already noted, acute myocardial infraction can occur in a person who has no history of diabetes mellitusÂII.
One of the risk factors for the aforesaid cardiac episode is diabetes mellitusÂII. The fact that the appellant had diabetes mellitusÂII was made known
to the insurance company. Therefore, it is observed that any complication which would arise from diabetes mellitusÂII was also within the
consideration of the insurer. Despite the aforesaid facts regarding the medical record of the insured, the insurance company decided to issue the policy
to the appellant. The aforesaid clause has to be read against the respondent insurer by applying the contra proferentem rule against it. Otherwise, the
very contract of insurance would become meaningless in the instant case. Hence, in our considered view, the respondentÂinsurance company was not
right in repudiating the policy in question.
69. The object of seeking a mediclaim policy is to seek indemnification in respect of a sudden illness or sickness which is not expected or imminent
and which may occur overseas. If the insured suffers a sudden sickness or ailment which is not expressly excluded under the policy, a duty is cast on
the insurer to indemnify the appellant for the expenses incurred thereunder.
70. Hence in the instant case, the repudiation of the policy by the respondent insurance company was illegal and not in accordance with law.
Consequently, the appellant is entitled to be indemnified under the policy. In view of the aforesaid discussion, we hold that the Commission was not
right in dismissing the complaint filed by the appellant herein.
71. The appeal is allowed in the following terms:
(i) The respondents are directed to indemnify the appellant regarding the expenses incurred by him towards his medical treatment within a period of
one month from the date of receipt of a copy of this judgment with interest at the rate of 6% per annum from the date of filing the claim petition
before the Commission till realisation.
(ii) Since the expenses incurred by the appellant was in terms of US Dollars and the claim would be paid in terms of Indian Rupees, the exchange rate
as it existed on the date the claim petition was filed by the appellant herein before the Commission or at Rs.45 INR, whichever is lesser, shall be
reckoned for the purpose of determining the conversion rate of US Dollars into Indian Rupees vide Meenakshi Saxena & Anr. Vs. ECGC Limited
(formerly known as Export Credit Guarantee Corporation of India Limited) & Anr. â€" (2018) 7 SCC 479.
(iii) The appellant is also entitled to Rs. 1,00,000/Â payable by the respondents towards the cost of litigation.
