Insurer Must Prove Exclusion Under Clause 4.2 Despite Continuous Coverage | Mediclaim Policy Claim : Delhi State CDRC

The Delhi State Consumer Disputes Redressal Commission dismissed an appeal by New India Assurance Co. Ltd., upholding the District Forum’s direction to pay Rs. 98,984/- towards medical expenses and Rs.30,000/- as compensation for harassment. The Court held that the insurer failed to discharge its burden to prove applicability of the exclusion under Clause 4.2 of the Mediclaim Policy, given the insured’s continuous coverage for the preceding 12 months.

Background & Facts

The Dispute

The dispute arose from a Mediclaim policy issued by New India Assurance Co. Ltd. (the Appellant/insurer) to Praveen Mishra (the Respondent/insured). The policy was initially in force from 27.12.2006 to 26.12.2007 and was renewed for the period 26.12.2007 to 25.12.2008. On 07.01.2008, the insured experienced pain in the upper abdomen and sought treatment at Ganga Ram Hospital, incurring medical expenses of Rs. 98,984/-. After discharge, he filed a reimbursement claim, which the insurer repudiated relying on Clause 4.2 of the policy, asserting that the disease was contracted within the first 30 days of the policy and thus excluded.

Key Facts

• The Mediclaim policy provided continuous coverage from 27.12.2006 to 25.12.2008, thereby satisfying the precondition of preceding 12 months’ uninterrupted insurance under the same scheme.
• On 07.01.2008, the insured first felt pain in the upper abdomen and was examined at Ganga Ram Hospital.
• Treatment was administered on 08.01.2008, 14.01.2008 and 02.02.2008; the insured was hospitalized and discharged on 25.05.2008 (as per the record) and incurred total medical expenses of Rs. 98,984/-.
• After discharge on 25.02.2008 (as alternatively noted in the record), the insured submitted a reimbursement claim.
• The insurer initially denied the cashless facility via letter Ex. CW-1/5, stating that the denial related only to the credit/cashless facility and that the claim could be submitted for reimbursement.
• The insurer subsequently repudiated the claim on the ground that the disease was contracted within the first 30 days of the policy, invoking Clause 4.2, which excludes diseases contracted during the initial 30 days of the policy.
• Clause 4.2 contains an express exception: the exclusion does not apply if the insured has been covered under the same or any other insurance scheme for a continuous period of the preceding 12 months without any break.
• The District Forum, in its order dated 26.04.2011, held that the exclusion could not be applied because the insured had continuous coverage for the preceding 12 months, directed the insurer to pay the claim amount of Rs. 98,984/- and Rs.30,000/- as compensation for harassment and litigation expenses, and required compliance within 30 days under Rule 25/27 of the CPC.
• The Appellant filed the present appeal (FA-244/2011) challenging the District Forum’s order.
• The State Commission reserved its order on 09.01.2026 and pronounced judgment on 12.10.2026.

Procedural History

• 04.08.2011: Original complaint (Complaint Case No. CC-1598/2008) filed by Praveen Mishra before the Consumer Disputes Redressal Forum, New Delhi (District Forum).
• 26.04.2011: District Forum passed order directing New India Assurance Co. Ltd. to pay Rs. 98,984/- towards medical expenses and Rs.30,000/- as compensation, with compliance within 30 days under Rule 25/27 of CPC.
• Date not specified: Appellant filed First Appeal No. FA-244/2011 before the Delhi State Consumer Disputes Redressal Commission challenging the District Forum’s order.
• 09.01.2026: State Commission reserved the order after hearing arguments.
• 12.10.2026: State Commission pronounced judgment dismissing the appeal and upholding the District Forum’s order.

Relief Sought

• The Appellant sought to set aside the District Forum’s order dated 26.04.2011, contending that the reimbursement claim was rightly repudiated under Clause 4.2 of the Mediclaim Policy.
• The Respondent sought upholding of the District Forum’s order and payment of the claim amount and compensation as awarded.

The Legal Issue

The central question was whether the insurer could validly repudiate the reimbursement claim by invoking Clause 4.2 of the Mediclaim Policy, which excludes diseases contracted within the first 30 days of the policy, despite the insured’s continuous coverage under the same scheme for the preceding 12 months. More specifically, the Court had to determine whether the burden of proving the applicability of the exclusion lay on the insurer and whether the insurer had discharged that burden by relying solely on the opinion of the Third Party Administrator (TPA) without producing cogent medical evidence to show that the disease was contracted within the excluded period.

Arguments Presented

For the Appellant/Petitioner

• The Appellant contended that the District Forum erred in holding that the exclusion under Clause 4.2 could not be applied, arguing that the reimbursement claim filed on 24.03.2008 was scrutinized by the TPA and rightly treated as “No Claim” because the disease was contracted within the initial 30 days of the policy.
• It asserted that the TPA’s opinion, based on case papers, was sufficient to establish the applicability of the exclusion and that the insurer was not required to produce independent medical evidence.
• The Appellant further argued that the initial denial of the cashless facility via letter Ex. CW-1/5 supported its position that the claim was not admissible.
• It relied on the principle that the insurer may rely on the TPA’s assessment in processing claims and that the District Forum’s findings were contrary to law and evidence.

For the Respondent/State

• The Respondent countered that the insurer bore the burden to prove that the claim fell within the scope of the exclusion under Clause 4.2, as settled in National Insurance Co. Ltd. v. Ishar Das Madan Lal, (2007) 4 SCC 105 and reiterated in Texco Marketing Pvt. Ltd. v. TATA AIG General Insurance Co. Ltd., (2023) 1 SCC 428.
• It emphasized that the insured had continuous coverage for the preceding 12 months (from 27.12.2006 to 25.12.2008), thereby attracting the express exception to Clause 4.2, which the insurer failed to rebut.
• The Respondent pointed out that no cogent medical evidence was placed on record to show that the disease was contracted within the first 30 days of the policy, and that the TPA’s opinion could not override the policy’s express terms.
• It argued that the initial denial of the cashless facility merely related to the credit facility and did not justify repudiation of the reimbursement claim.

The Court's Analysis

The Court began by reiterating the well-settled principle that where an insurer seeks to repudiate a claim by relying on an exclusionary clause, the burden lies on the insurer to establish that the case squarely falls within the scope of such exclusion. It quoted the observation from National Insurance Co. Ltd. v. Ishar Das Madan Lal, (2007) 4 SCC 105, and affirmed that this principle was recently reiterated in Texco Marketing Pvt. Ltd. v. TATA AIG General Insurance Co. Ltd., (2023) 1 SCC 428, wherein the Court held that the insurer must plead and lead cogent evidence to prove the applicability of an exclusionary clause.

Applying this principle, the Court examined whether New India Assurance had discharged its burden concerning Clause 4.2 of the Mediclaim Policy. It noted that Clause 4.2 excludes diseases contracted during the first 30 days of the policy, but contains an express exception: the exclusion does not apply if the insured has enjoyed continuous coverage under the same or any other insurance scheme for the preceding 12 months without any break.

The Court found it an admitted fact that the policy in question, commencing on 26.12.2007, was a renewal of the earlier policy that had been in force from 27.12.2006 to 26.12.2007. Consequently, the insured had uninterrupted coverage for the preceding 12 months, squarely bringing the case within the exception to Clause 4.2. The Appellant did not dispute this fact.

Turning to the evidence, the Court observed that the Appellant had not placed any cogent medical evidence on record to establish that the disease was contracted within the first 30 days of the renewed policy. On the contrary, the insured had first experienced pain on 07.01.2008 and sought treatment thereafter, a timeline consistent with the exception. The Appellant’s reliance on the TPA’s opinion was deemed insufficient; the Court held that the TPA may assist in processing claims but cannot override the express terms of the policy or relieve the insurer of its evidentiary burden.

The Court also considered the initial denial of the cashless facility via letter Ex. CW-1/5, which merely informed the insured that the denial related to the credit/cashless facility and that he could submit the claim for reimbursement. This correspondence, the Court noted, did not assist the insurer’s case and could not be used to justify repudiation.

Having found that the Appellant failed to prove the applicability of the exclusion, the Court concluded that the District Forum’s finding of deficiency in service was correct. It affirmed that the claim amount of Rs. 98,984/- represented the actual medical expenses incurred and that the compensation of Rs.30,000/- for harassment and litigation expenses was not excessive or disproportionate. Accordingly, the appeal was dismissed and the impugned order dated 26.04.2011 was upheld, with no order as to costs.

The Verdict

The Appeal was dismissed and the impugned order dated 26.04.2011 passed by the Consumer Disputes Redressal Forum, New Delhi, in Complaint Case No. CC-1598/2008 was upheld. The Court directed New India Assurance Co. Ltd. to pay the claim amount of Rs. 98,984/- towards medical expenses and Rs.30,000/- as compensation for harassment and litigation expenses, with compliance required within 30 days under Rule 25/27 of the CPC. No costs were awarded.

What This Means For Similar Cases

Burden on Insurer to Prove Exclusion

• The insurer must lead cogent medical evidence to show that the disease falls within the exclusionary period; reliance on a TPA’s opinion alone is insufficient.
• This reinforces the principle laid down in National Insurance Co. Ltd. v. Ishar Das Madan Lal and Texco Marketing Pvt. Ltd. v. TATA AIG General Insurance Co. Ltd.

Continuous Coverage Triggers Exception Under Clause 4.2

• Where the insured has enjoyed uninterrupted coverage under the same or any other insurance scheme for the preceding 12 months, the exclusion under Clause 4.2 cannot be invoked.
• The exception is express and must be considered before applying the exclusion.

TPA Opinion Cannot Substitute for Cogent Evidence

• While a TPA may assist in claim processing, its view does not override the policy’s contractual terms or relieve the insurer of the burden of proof.
• Courts will scrutinize whether the insurer has discharged its evidentiary onus independent of third-party assessments.