"SUPREME COURT RESTORES INSURANCE REIMBURSEMENT AFTER POLICY DISPUTE AND RENEWAL ISSUES".

CASE TITLE – Om Prakash Ahuja vs Reliance General Insurance Co. Ltd. etc.

CASE NO. – CIVIL APPEAL NOS. 2769-2770 OF 2023

DATED ON – 4 July, 2023

QUORUM – Hon’ble Justice Abhay S. Ok , Rajesh Bindal 

FACTS OF THE CASE –

Om Prakash Ahuja’s health insurance policy with Reliance General Insurance Ltd. covered ₹2 lakhs for health issues and ₹4 lakhs for critical illnesses. The policy was active from July 2007 to July 2008 and renewed until July 2009. His wife was diagnosed with ovarian cancer and treated from 2008 to 2009. The insurance company refused to reimburse the expenses, citing non-disclosure of her rheumatic heart disease. Ahuja filed a complaint, arguing that the insurance company should cover the treatment costs and renew the policy. The District Forum ordered reimbursement of the treatment costs plus 8% interest and mandated renewal of the policy. The State Commission upheld this decision, but the National Commission overturned the renewal order, ruling it improper. In a subsequent complaint, Ahuja claimed additional expenses for treatments from 2009 to 2012 and filed against the insurance company. The District Forum awarded him ₹7,47,638.19, with 9% interest, compensation for harassment, and litigation costs. However, the National Commission allowed the insurance company's appeal, ruling that the renewal of the policy was not valid and thus no claims for that period were admissible

ISSUES –

Whether the insurance company's rejection of the claim for reimbursement of medical expenses based on the non-disclosure of rheumatic heart disease was justified?

Whether the appellant was entitled to reimbursement of medical expenses incurred after the expiry of the original policy period, particularly for treatments provided after July 6, 2009 ?

Whether the insurance company was obligated to renew the health insurance policy beyond July 6, 2009, as directed by the lower authorities?

LEGAL PROVISIONS –

Consumer Protection Act, 1986

Indian Contract Act, 1872

CONTENTIONS OF THE APPELLANT –

The appellant’s counsel argued that although the insurance company reimbursed the treatment expenses for his wife, who later passed away, the reimbursement only covered expenses incurred up to July 6, 2009. The District Forum ordered reimbursement for these expenses, and this decision was upheld by the National Commission. However, the insurance company rejected claims for expenses incurred after July 6, 2009. The National Commission eventually overturned the District Forum’s order, ruling that the refusal to renew the policy was unreasonable, as rheumatic heart disease was unrelated to ovarian cancer. The court supported its decision by referencing the case of Sulbha Prakash Motegaonkar v. LIC.

CONTENTIONS OF THE RESPONDENT –

The insurance company argued that the appellant could not benefit from the Commission's order. The appellant had a policy from 2007 to 2008, which was renewed through 2009, and claimed expenses for his wife's treatment. The District Forum’s directive to reimburse these expenses was upheld by the National Commission, and the insurance company did not challenge this decision. However, the National Commission ruled that the renewal of the policy from July 7, 2009, was improper. The appellant's last policy expired on July 6, 2009, and there was no renewal until October 2011, which was subject to the final decision. Consequently, the National Commission found the State Commission's renewal directive to be incorrect.

COURT ANALYSIS AND JUDGEMENT –

The appellant submitted a claim on March 10, 2008, to Paramount Health Services Private Limited, the agent for the insurance company. The policy was renewed on July 7, 2008, but the insurance company did not provide a clear response. A certificate from Rajiv Gandhi Cancer Institute and Research Centre, New Delhi, confirmed that the appellant’s wife had been under treatment since March 8, 2008, and that her rheumatic heart disease was unrelated to her ovarian cancer. Despite this, the insurance company initially denied the claim based on the wife’s pre-existing condition and refused to renew the policy. This refusal was challenged under the Consumer Protection Act, 1986. Although the District Forum directed the renewal of the policy, it was not carried out. The National Commission later overturned this renewal directive on November 26, 2018, even though the renewal premium had been paid. The rulings in Satwant Kaur Sandhu vs. New India Assurance Company Limited , 

Reliance Life Insurance Company Limited vs. Rekhaben Nareshbhai Rathod , and  Oriental Insurance Company Limited vs. Mahendra Construction are not relevant to the issue of claim repudiation due to fact concealment at the time of policy purchase. Consequently, the National Commission’s order is overturned, and the renewal directives from the District and State Forums are reinstated. The appellant’s claim for reimbursement is upheld, and no order for costs is issued.

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Judgement Reviewed By- Pratiksha Swain