Upholding an order passed by the Punjab state consumer disputes redressal commission and rejecting the contention of DHFL Pramerica Life Insurance Company Ltd about suppression of health insurance, the national consumer disputes redressal commission (NCDRC) directed the insurer to pay Rs21.72 lakh with an interest of 7%pa (per annum) to the father of the deceased life assured (DLA) for the repayment of a housing loan.
In
an order last week, the NCDRC bench of air vice-marshal (AVM) J Rajendra (retd) (presiding member) says, "It was incumbent upon the insurer to bring on record specifically stating the scope of treatment and other associated medical aspects, if any, which are violative of the proposal performa and establish the same by leading evidence rather than merely filing photocopies of the certain clinical information alleged to have been taken by the DLA...I am of the considered view that the well-reasoned order passed by the state commission does not suffer any illegality or infirmity, except for the award of compensation over and above the award of interest element."
The bench asked DHFL Pramerica Life Insurance to pay Rs21.72 lakh with 7% interest to Dewan Housing Finance Corporation Ltd (DHFL) for repayment of the loan amount from the date of repudiation of the claim till the date of full payment. "The amount which remained with DHFL after adjustment of the entire loan amount as required shall be paid to the complainant, being nominee and father of Sarbjit Singh (the DLA), within one month after that," it added.
Sarbjit Singh from Gurdaspur district in Punjab had obtained a home loan under which DHFL distributed Rs21.72 lakh with a repayment schedule for 228 months. The home loan was insured under the DHFL Pramerica Group Credit Life policy of DHFL Pramerica Life Insurance, with a maturity date of 29 April 2036. Sarbjit Singh, employed by the Punjab police, paid Rs2.19 lakh as a lump sum premium for the insurance policy and designated his father, Sohan Singh, as the nominee. However, on 6 August 2017, Sarbjit Singh died due to a heart attack. Even after the death of his son, Sohan Singh continued to pay the home loan installments.
When he filed a claim with DHFL Pramerica Life Insurance, it was rejected by DHFL Pramerica Life Insurance, alleging non-disclosure of pre-existing medical conditions, specifically seizure disorder and diabetes mellitus, by Sarbjit Singh, the DLA. Sarbjit Singh's post-mortem report concluded that the cause of death was 'myocardial infarction' leading to a massive heart attack.
Sohan Singh then filed a complaint with the state commission seeking the full insured amount of Rs21.72 lakh with 18%pa interest, Rs1 lakh as compensation for mental harassment and Rs10,000 litigation cost.
During the hearing, DHFL contended that it had no involvement in the repudiated claim by DHFL Pramerica Life Insurance. It also emphasised that its role is solely as a housing finance company and not in the insurance business. It also denied pressurising Sohan Singh to continue paying loan instalments following the death of his son on 6 August 2017.
DHFL Pramerica Life Insurance vehemently contested the complaint, dismissing the allegations as baseless. It asserted that Sarabjit Singh, in the proposal form, falsely denied suffering from diabetes despite a medical history of hypo-glycemia, rhinosinusitis, seizure disorders, and diabetes mellitus. "The insurance policy was issued without a prior medical examination based solely on the information provided by him. Due to his misleading statements regarding his health, the insurance contract is voidable due to his lack of good faith," it added.
While allowing the complaint, the state commission stated, "We are unable to rely upon the photostat copies of the alleged medical record without any proof of its authenticity in the absence of affidavit of investigator and affidavit of the concerned doctor on the record. Consequently, it is held that DHFL Pramerica Life Insurance could not substantiate this point that DLA suffered from pre-existing ailments and it was covered under the exclusion clause of the policy."
It directed the insurance company to pay Rs21.72 lakh with 7%pa interest to DHFL for repayment of the loan amount and, after adjusting the loan amount due, hand over the balance amount to Sohan Singh. It also awarded a compensation of Rs60,000 for mental harassment and litigation costs.
Being aggrieved, DHFL Pramerica Life Insurance challenged the order before NCDRC. The counsel for the insurer argued that the DLA failed to adhere to the principle of utmost good faith when obtaining the subject insurance policy.
The counsel for Sohan Singh vehemently argued that the rejection of the claim by DHFL Pramerica Life Insurance lacks substantiation due to the absence of any affidavit from the investigator who collected the photocopies of the medical records. "There is no affidavit from the treating doctor at Hartej Maternity and Nursing Home, Amritsar, to verify the authenticity of the medical records. Mere photocopies of medical records hold no legal weight without proper certification. The onus of proving that the insured had pre-existing ailments at the time of insurance and that these ailments were excluded by the policy clause lies with the insurer. However, no evidence was presented by DHFL Pramerica Life Insurance in this regard. Consequently, the insurer is obligated to pay the insurance amount to Sohan Singh."
After examining the pleadings and documents placed on record and rendering thoughtful consideration to the arguments, the NCDRC bench observed that the primary issue is the validity of the insurance claim made by Sohan Singh against the insurer.
AVM (retd) Rajendra says, "It is evident from the record that in the proposal form, the DLA had answered all the health-related questions in negative and stated that he does not suffer from any of the stated medical conditions. It is also a fact that the insured suddenly died due to a heart attack. In his affidavit, Sohan Singh denied any pre-existing medical condition with respect to the insured. While repudiating the claim vide letter dated 15 December 2017, DHFL Pramerica Life Insurance did not bring out any evidence with respect to the history and seizure disorder and diabetes mellitus suffered by the insured prior to the date of application other than certain photocopies of treatment or clinical information with respect to certain treatment the DLA had undergone."
While dismissing the appeal, he directed DHFL Pramerica Life Insurance to pay Rs21.72 lakh with an interest of 7%pa to DHFL for repayment of the loan amount within one month. "The amount which remained with DHFL, after adjustment of entire loan amount as required shall be paid to Sohan Singh, being nominee and father of Sarbjit Singh (DLA), within one month thereafter. The composite compensation to Sohan Singh is reduced to Rs20,000 from Rs60,000," NCDRC says.
(First Appeal No863 of 2019 Date: 22 March 2024)
