1.       The present Revision Petition (RP) has been filed by the Petitioner(s) against Respondent(s) as detailed above, under section 21(b) of Consumer Protection Act 1986, against the order dated 14.08.2018 of the State Consumer Disputes Redressal Commission, Rajasthan, Jaipur, (hereinafter referred to as the ‘State Commission’), in First Appeal (FA) No. 1325/2017 in which order dated 26.10.2017, District Consumer Disputes Redressal Forum, Ajmer (hereinafter referred to as District Forum) in Consumer Complaint (CC) no 107/2016 was challenged, inter alia praying to set aside the order passed by the State Commission and direct the respondents to reinstate the policy in favor of the present petitioner.

2.       While the Revision Petitioner (hereinafter also referred to as complainant) was Respondent before the State Commission and complainant before District Forum, and the Respondent(s) (hereinafter also referred to as OPs) were Appellants before the State Commission and OPs before the District Forum.

3.       Notice was issued to the Respondent(s). Parties filed Written Arguments/Synopsis on 27.01.2023 (Petitioner) and 23.05.2023 (Respondents) respectively.

4.       Brief facts of the case, as emerged from the RP, Order of the State Commission, Order of the District Commission and other case records are that:-

The complainant, along with her husband, received a Health Insurance Policy dated 31.03.2010, named Family Health Optima No. P/161120/01/2010/002979, from the OPs (Insurance Company). Additionally, the Insurance Company did a top-up with another Star Super Surplus (Floater) Policy. The top-up policy covered excess expenditures up to 10 Lakh Rupees in case of illness. After three years of having the policy, the complainant experienced symptoms such as loss of appetite, swelling on her face, and discoloration of urine (yellow), along with yellowing of the skin. On 16.12.2013, she underwent a check-up at the Institute of Liver and Biliary Sciences, New Delhi, which revealed that she was suffering from Chronic Liver Disease, Jaundice, Hypertension, and other diseases. She was admitted and underwent treatment at the hospital from 16.12.2013 to 04.01.2014. The Insurance Company was duly informed about her hospitalization, and she was discharged on 04.01.2014. Following a recurrence of her illness, she sought treatment again at the same hospital from 17.01.2014 to 28.01.2014, incurring an amount of Rs. 2,57,589/- in expenses. After completing all formalities, the complainant submitted a claim of Rs. 4,97,376/- to the OPs. However, the company denied the claim, asserting that the complainant had been suffering from these illnesses since 2009, before obtaining the policy, and had continuously received treatment. The complainant disputes these claims, asserting that she did not suffer from these illnesses before taking the policies or prior to 2014. In response to the denial, the complainant has filed a complaint against the OPs on grounds of deficiency in service, seeking appropriate relief.

5.       Vide Order dated 26.10.2017, in the CC no. 107/2016 the District Forum has allowed the complaint and directed OPs to pay a total amount of Rs. 4,97,376/- with 9% interest with compensation amount of Rs. 5,000/- and litigation expenses of Rs. 5,000/-.

6.       Aggrieved by the said Order dated 26.10.2017 of District Forum, Respondents/OPs appealed in State Commission and the State Commission vide order dated 14.08.2018 in FA No.1325/2017 has set aside the District Forum’s order and allowed the appeal.

7.       Petitioner has challenged the said Order dated 14.08.2018 of the State Commission mainly/inter alia on following grounds:

1. The District Forum acknowledged that there is no reason to believe that the petitioner/complainant suffered from chronic liver disease and hypertension prior to taking the said insurance policy. The only record submitted by the insurance company, a pre-history report from a hospital in New Delhi in 2009-2010, mentioned the patient as a known case of chronic liver disease. However, the forum noted that no other relevant records were provided by the insurance company. The order of the District Forum appreciates that, before the year 2014, there were renewals of respective policies, and the petitioner was found to be completely healthy and fit by the physician during those times. The District Forum concluded that the actions of the respondents/OPs were based on improper evidence, and the denial of the claim was done wrongly. Considering the sum assured policy under the terms of the said Policy, the complainant is entitled to receive a claim amount of Rs. 2,39,787/- under Claim No. CLI/2015/221113/0011957 and Rs. 2,57,589/- under Claim No. CLI/2014/221113/0184878.

2. The State Commission erroneously passed an order without properly appreciating the merits of the case and did not delve into the legal and factual aspects of the matter. The State Commission failed to recognize that the complainant had sent a letter to the OPs, informing them about the correction of the policyholders' age during the renewal of the policy on 26.3.2013. The OPs did not object at that time, accepted the premium amount, and subsequently renewed the policy. This amounts to acceptance, and the grounds for repudiation on 12.8.2014 cannot be valid after more than a year. The State Commission overlooked the fact that the discharge summary from the Institute of Liver and Biliary Sciences, New Delhi, dated 28.1.2014, explicitly states that the complainant suffered from "chronic liver disease" in the year 2010. The summary does not mention any occurrence of the disease in 2009, and therefore, there was no basis for the State Commission to assume that the complainant had the disease before obtaining the insurance policy from the OPs. The District Forum correctly recognized this fact in its order dated 26.10.2017.

3. The State Commission failed to consider that the OPs cancelled the insurance policy concerning the present complainant arbitrarily and without a valid basis, as indicated in the letter dated 06.11.2015. In passing the order dated 14.8.2018, the State Commission neglected to appreciate the observations made by the District Forum. The State Commission erroneously upheld the justification for repudiating the complainant's claim, citing the suppression of material facts and the alleged pre-existing conditions of chronic liver disease and hypertension before filling the proposal form for the said policy. The District Forum thoroughly discussed and provided reasons for deeming the repudiation of the complainant's claim by the OPs as unjustified.

8.       Heard counsels of both sides.  Contentions/pleas of the parties, on various issues raised in the RP, Written Arguments, and Oral Arguments advanced during the hearing, are summed up below.

1. The counsel for Petitioner/complainant argued that the District Forum found no evidence supporting the complainant's pre-existing chronic liver disease and hypertension before obtaining the insurance policy. The insurance company submitted a 2009-2010 hospital report mentioning chronic liver disease, but the forum noted the lack of other relevant records. Previous policy renewals up to 2014 indicated the petitioner's good health, invalidating the denial of the claim based on improper evidence. The District Forum ordered a claim of Rs. 2,39,787/- under Claim No. CLI/2015/221113/0011957 and Rs. 2,57,589/- under Claim No. CLI/2014/221113/0184878.

2. The State Commission, however, erred in not considering the corrected age communication during policy renewal and accepting premiums without objection. The Commission overlooked the discharge summary specifying chronic liver disease in 2010, not 2009, rejecting the assumption of pre-existing conditions. The cancellation of the policy was arbitrary, lacking valid grounds. The State Commission's order upholding the claim denial was erroneous, disregarding the District Forum's justified findings.

3. The counsel for OPs/Respondents argued that the Insurance contract is founded on the principle of Utmost Good Faith, wherein the proposer is obligated to disclose accurate and complete facts relevant to the proposed insurance. This includes essential information about the age, health, habits, and other pertinent details of the individuals to be insured. Failure to disclose such material facts may empower the Insurer to repudiate the claim. In the present case, the first insurance policy, obtained by Mr. Vijay Kumar for himself and Mrs. Anita Kumar, the complainant/petitioner, involved a deliberate attempt to mislead insurers. The proposal indicated Mr. Vijay Kumar's age, triggering a pre-insurance medical examination as per the insurer's norms for individuals over 50 years. However, Mrs. Anita Kumar's date of birth was misrepresented to avoid her examination, constituting a breach of Utmost Good Faith. This intentional misrepresentation renders the policy void ab initio, making the current complaint non-maintainable.

4. The medical documents reveal a provisional diagnosis of jaundice and a history of hypertension (HTN) for the past two years. The denial of cashless approval on 18.12.13 was based on the diagnosis of Chronic Liver Disease (CLD) in 2009 and a history of enteric stone and hypertension. The subsequent Discharge Summary dated 18.1.2014 confirmed the patient's diagnosed case of CLD since 2010 and mentioned the need for a liver transplant. The counsel highlights discrepancies in the answers provided in the proposal form, where the questions related to past medical conditions were consistently answered in the negative. Additionally, the proposer/insured signed a declaration in the proposal form, affirming the truthfulness and completeness of the statements and acknowledging the consequences of incorrect or incomplete information. The counsel further argued that the deliberate suppression of the patient's actual age, history of CLD, and past medical conditions constitutes fraud under section 17 of the Contract Act. Such fraudulent actions, including the breach of conditions specified in the policy, render the insurance contract unenforceable. The OP's invocation of condition no. 13 of the policy in cancelling it for the patient's name is justified under these circumstances.

5. The respondent has referred to judgments of the Hon'ble Supreme Court in PC Chacko vs. LICI, AIR 2004 SC 424; Satwant Kaur Sandhu, Sealark Fisheries vs United India Insurance, 2009 (8) SCC 316 , Mithulal Nayak vs. LICI AIR 1962 SC 814, before the forums below. However, the District Forum wrongly interpreted the law contained in those judgments. The counsel further asserted that regarding the patient's admissions to the hospital on 16.12.2013 to 02.01.2014 and 17.01.2014 to 28.01.2014, a claim was filed for Rs. 2,57,589/- for the latter period. The counsel contends that no amount is allowable due to the concealment of material facts and breach of policy conditions. Even if the claim is deemed admissible, it cannot exceed Rs. 2,57,589/- and no claim can be filed under the second policy (Star Super Surplus - floater top-up policy) as the claimed amount falls within the limit of coverage of the first policy. The District Forum erred in its observation regarding the non-submission of past medical records, the counsel asserts that such records were actively concealed from insurers and the Forum should have directed the complainant to place it on record. The argument further disputes the Forum's observation on the absence of an affidavit from a doctor or related person, asserting that past history in a hospital is typically provided by the patient, relative, or known person for proper diagnosis and treatment, and it cannot be regarded as false. The complainant has not disputed the documents on record.

6. The counsel further contends that the District. Forum made an erroneous observation regarding the continuous renewal of policies, emphasizing that medical examination is typically conducted only at the inception of the first policy if the person to be insured is over 50 years old. Additionally, it is asserted that the District Forum allowed a claim for an amount exceeding the policy sum insured and the amount claimed in the claim form. The complainant held two policies but filed a claim only under policy no. 1648, where the limit of coverage is Rs. 3,75,000/-. However, the Forum allowed Rs. 4,97,376/-. The counsel states that no amount is allowable due to the concealment of material facts. Even if the claim were found payable, the amount should not exceed Rs. 2,57,589/-. Furthermore, it is argued that no claim can be filed under the second policy (Star Super Surplus - floater top-up policy) as the claimed amount falls within the limit of coverage of the first policy. This policy is applicable only if the claim amount per hospitalization in one stretch is above 3 lacs, which is not the case here. The interest rate should not exceed 6%, and no additional compensation should be awarded as it would amount to a double benefit. The State Commission recognized the deliberately given negative answers in the proposal form to questions seeking information on past medical conditions. The Commission also acknowledged that the patient suffered from hypertension (HT) and chronic liver disease (CLD) from 2009-2010.

7. The counsel for OPs/Respondents relied on decisions by the Hon'ble Supreme Court and the National Commission where repudiation was held justified in view of section 45 of Insurance Act; Mithulal Nayak vs. LICI AIR 1962 SC 814; PC Chacko vs. LICI, AIR 2004 SC 424; LICI vs. Asha Goel, AIR 2001 SC 549; Satwant Kaur Sandhu, Sealark Fisheries vs United India Insurance, 2009 (8) SCC 316; the State Commission rightly held that the complainant suppressed material facts of pre-existing diseases defined in the policy, justifying the repudiation under section 45 of the Insurance Act. The Hon'ble Kerala High Court's decision in P. Sarojam vs LIC of India AIR 1986 Kerala 201, emphasizing the proposer's duty of disclosure has observed that "The false answers to the questions in the proposal form given by the insured vitiate the contract of insurance and the defendant Corporation is entitled to repudiate the policies and decline payment there under."

9.       We have carefully gone through the orders of the State Commission, District Forum, other relevant records of the case and the rival contentions of the parties.  At the time of filling up the proposal form on 30.03.2010, the Petitioner wrongly mentioned the date of birth of his wife Mrs. Anita Kumar as 17.12.1960 while her actual date of birth as per the pass-port was 06.12.1957.  As per the date of birth shown in the proposal form she is shown as under 50 years (49 years 3 months13 days).  Had her date of birth been correctly shown, which is above 50 years as on the date of filling up the proposal form, as per guidelines of the Insurance Company, the Respondent Company would have made her undergo for a pre-insurance medical examination.  In fact, her husband, Mr. Vinay Kumar who had shown himself above 50 years even as per the wrong date indicated in the proposal form (01.02.1956), while as per pass-port his date of birth was 01.02.1953, he being above 50 years, as on the date of proposal form, did undergo such a medical examination.  It was only on 26.03.2013 i.e. after 3 years that they intimated the Insurance Company for correction in the dates of birth based on their pass-ports.  The Insurance Company contends that wrong date of birth was deliberately given in the proposal form to avoid pre-insurance medical examination, which is mandatory for persons of above 50 years of age.  Without a satisfactory medical report insurers would not have given insurance.  Hence the contentions of the Insurance Company is that there was a suppression of material fact in the proposal form with respect to the correct date of birth due to which the complainant avoided pre-insurance medical examination of his wife Mrs. Anita Kumar.  Further the Insurance Company contends that there was material suppression of fact relating to pre-existing ailments.  The in-patient assessment sheet of hospital states that CLD (Chronic Liver Disease) was diagnosed in 2009 and further the discharge summary dated 28.01.2014 states that patient is diagnosed case of CLD in 2010.  But in the proposal form seeking information on medical conditions, these questions have been answered in the negative. 

10.     Hence, after careful perusal of the documents produced by the Insurance Company, we are in agreement with the contentions of the Insurance Company that there was a material suppression of fact with respect to pre-existing ailments. Hence, they have rightly relied upon the various judgements of the Hon’ble Supreme Court and this Commission cited in the preceding paras that in the case of suppression of material facts by the insured, the Insurance Company is well within its rights to repudiate the claim.

11.     In view of the above, the State Commission was justified in allowing the Appeal of the Respondent/Insurance Company and setting aside the order of the District Forum.  As was held by the Hon’ble Supreme Court in Rubi Chandra Dutta Vs. United India Insurance Co. Ltd. [(2011) 11 SCC 269], the scope in a Revision Petition is limited. Such powers can be exercised only if there is some prima facie jurisdictional error appearing in the impugned order. In Sunil Kumar Maity Vs. State Bank of India & Ors. [AIR (2022) SC 577]  held that “the revisional jurisdiction of the National Commission under Section 21(b) of the said Act is extremely limited. It should be exercised only in case as contemplated within the parameters specified in the said provision, namely when it appears to the National Commission that the State Commission had exercised a jurisdiction not vested in it by law, or had failed to exercise jurisdiction so vested, or had acted in the exercise of its jurisdiction illegally or with material irregularity.”

12.     We find no illegality or material irregularity or jurisdictional error in the order of the State Commission, hence, the same is upheld.  Accordingly, the Revision Petition is dismissed.

13.     The pending IAs in the case, if any, also stand disposed off.