The Delhi State Consumer Disputes Redressal Commission dismissed an appeal by National Insurance Co. Ltd., affirming the District Commission’s award of Rs 1,80,000 towards hospitalization expenses, Rs 75,000 for mental agony, and Rs 10,000 for litigation costs, with interest, on the ground that the insurer failed to supply the policy terms and conditions containing Exclusion Clause 4.9 to the insured, thereby rendering reliance on that clause unsustainable.
Background & Facts
The Dispute
The dispute arose from a hospitalization claim filed by Mr. Ravinder Kumar Gupta (Complainant/Respondent No.1) for medical expenses incurred on the treatment of his wife, Smt. Kusum Gupta, who was admitted to Deepak Memorial Hospital on 11.02.2014 with breathlessness, chest pain, and body ache, and discharged on 17.02.2014 after incurring expenses of Rs 1,80,000. The claim was made under a Hospitalization Benefit Policy (Policy No. 361500/48/13/850003576) issued by National Insurance Co. Ltd. (Appellant/Opposite Party) for the period 10.01.2014 to 09.01.2015, covering the complainant and his family.
Key Facts
- The complainant had previously held a similar policy with Reliance General Insurance from 11.01.2010 to 10.01.2011, and thereafter continuously renewed the hospitalization benefit policy with National Insurance Co. Ltd. for the periods:
- i. 10.01.2011 to 09.01.2012
- ii. 10.01.2012 to 09.01.2013
- iii. 10.01.2013 to 09.01.2014
- iv. 10.01.2014 to 09.01.2015
- At the time of taking the insurance premium, the representative of the opposite party assured the complainant that the policy would cover every disease and that medical bills would be reimbursed, but no policy terms and conditions were provided to the complainant.
- On the basis of such assurances, the complainant continued to insure himself and his family.
- On 11.02.2014, the complainant’s wife felt breathlessness, chest pain, and body ache and was admitted to Deepak Memorial Hospital.
- The X-ray chest report dated 12.02.2014 recorded slight cardiac enlargement and obliteration of left C.P. angle.
- A certificate dated 13.02.2014 from Dr. Kapil Khanna, MD Medicine, Deepak Memorial Hospital, stated cardiac enlargement with bilateral basal congestion and obliteration of left C.P. angle.
- The complainant’s wife was discharged on 17.02.2014, and the discharge summary, along with bills and receipts, was enclosed with the complaint as Annexure C-2.
- Since the opposite party denied cashless treatment, the complainant had to pay the entire expenses of Rs 1,80,000 and lodged a claim for reimbursement with the opposite party on 20.03.2014.
- The opposite party sought doctor’s certificates; the complainant submitted certificates dated 19.04.2014, 28.08.2014, and 20.03.2015 from Dr. Kapil Khanna, with copies of the first two enclosed as Annexure C-4 and the third as Annexure C-5.
- As per the doctor’s certificates, it was clear that the complainant’s wife was not suffering from any ailment in the past.
- The wife of the complainant died on 15.07.2014; the death certificate was enclosed as Annexure C-6.
- The opposite party repudiated the claim vide letter dated 31.07.2014 by invoking Exclusion Clause 4.9 of the terms and conditions, which excludes "Treatment for obesity or conditions arising therefrom (including morbid obesity) and any other weight control and management programme/services/supplies or treatment."
- The complainant requested the opposite party to reconsider the claim via letters dated 30.08.2014, 07.01.2015, and 09.04.2015, but received no response; copies of these letters were enclosed as Annexure C-8.
- It was alleged that the rejection of the claim was arbitrary, illegal, and baseless, constituting an unfair trade practice and deficiency of service, causing extreme mental agony, harassment, and pain to the complainant.
- The complainant prayed for: i. Payment of Rs 1,80,000 towards hospitalization and medical expenses. ii. Interest at 18% per annum from 20.03.2014 till 30.05.2016 (amounting to Rs 68,528) and thereafter until realization. iii. Rs 75,000 towards causing mental agony and harassment. iv. Rs 30,000 towards litigation costs.
Procedural History
- 04.07.2024: Date of institution of the complaint before the District Consumer Disputes Redressal Commission-I, North District, Delhi.
- 16.05.2024: The District Commission passed its order, directing the opposite party to pay:
- Rs 1,80,000 as reimbursement of claim, within 30 days from receipt of order, with interest at 9% p.a. from 20.04.2014 (date of expiry of 30 days from filing of claim) till payment.
- Rs 75,000 as compensation for mental agony and harassment.
- Rs 10,000 as litigation expenses.
- It was clarified that if payment is not made within 30 days, the opposite party shall be liable to pay interest @12% p.a. from the date of expiry of the 30-day period.
- 02.09.2026: Date of hearing before the Delhi State Consumer Disputes Redressal Commission (First Appeal No. 452/2024).
- 22.09.2026: Date of decision/judgment.
Relief Sought
The appellant (National Insurance Co. Ltd.) sought to set aside the order dated 16.05.2024 passed by the District Commission, contending that the District Commission erred in holding the appellant deficient in service and in awarding compensation.
The Legal Issue
The central question was whether the District Commission had erred in holding the appellant deficient in providing services by repudiating the claim of the respondents on the ground of non-supply of the terms and conditions of the insurance policy containing Exclusion Clause 4.9.
Arguments Presented
For the Appellant
The appellant contended that the District Commission failed to appreciate that the treatment in respect of obesity or any disease arising therefrom was not payable under Exclusion Clause 4.9 of the policy, and that the appellant rightly repudiated the claim. It further argued that the terms and conditions of the policy were applicable to the respondents and that the insurance policy is a binding contract between insurer and insured. The appellant submitted that the District Commission erred in accepting the respondents’ plea that the terms and conditions were not supplied, as the respondents had not filed any letter or email showing they had approached the appellant for a copy or had requested the same. The appellant also relied on the opinion of Dr. A.K. Batra dated 15.01.2018 regarding non-submission of past medical records amounting to withholding of material facts, and contended that the award of Rs 75,000 towards compensation and Rs 10,000 towards litigation expenses was excessive.
For the Respondent
The respondents denied all contentions of the appellant and submitted that the entire material on record was properly scrutinized before passing the impugned order. They reiterated that they had continuously held hospitalization benefit policies and that the terms and conditions were never supplied to them. Respondent No.1 had specifically addressed a communication dated 25.12.2014 to the appellant stating that no terms and conditions had been provided, which communication was duly acknowledged by the appellant. The respondents further submitted that the appellant had produced two contradictory sets of terms and conditions before the District Commission and failed to clarify which set was applicable to the policy in question. They also submitted that the three medical certificates issued by Dr. Kapil Khanna established that Smt. Kusum Gupta had no pre-existing ailment at the time of taking the insurance policy, and that the repudiation of the claim by relying on an exclusion clause never supplied or communicated to the insured was arbitrary and amounted to deficiency in service.
The Court's Analysis
The State Commission perused the material on record and noted that the fact of the respondents having taken the Hospitalization Benefit Policy bearing No. 361500/48/13/850003576 for the period 10.01.2014 to 09.01.2015 was not disputed. It was clear from the record that Smt. Kusum Gupta was hospitalized at Deepak Memorial Hospital from 11.02.2014 to 17.02.2014 with complaints of breathlessness, chest pain, and body ache, and an expenditure of Rs 1,80,000 was incurred towards her treatment. The respondents lodged the claim with the appellant on 20.03.2014. However, the appellant, vide letter dated 31.07.2014, repudiated the claim on the ground that the claim was not payable under Clause 4.9 of the said policy with respect to obesity or any other disease arising therefrom (including morbid obesity) and any other weight control and management programme/services/supplies or treatment.
The Commission observed that the appellant had failed to produce any proof of delivery of the terms and conditions to the respondents or to place on record any material to establish that the terms and conditions containing the relevant exclusion clause were supplied to them. Moreover, the respondents had filed the letter dated 25.12.2014 addressed by Respondent No.1 to the appellant stating that the terms and conditions had not been supplied, which letter was duly acknowledged by the appellant. Therefore, the Commission was of the view that the District Commission rightly observed that the appellant could not rely upon the terms and conditions which were never supplied to the insured.
The Commission referred to the judgment of the Hon’ble Supreme Court in Bharat Watch Company Vs. National Insurance Co. Ltd. 2019 INSC 521, wherein it was held: "...the conditions of exclusion under the policy document were not handed over to the Appellant by the insurer and in the absence of the Appellant being made aware of the terms of the exclusion, it is not open to the insurer to rely upon the exclusionary clauses." The Commission noted that this dictum reflects that the terms and conditions of the insurance policy, including the exclusion clauses, must be brought to the notice of the insured. In the present case, the appellant had failed to establish that the terms and conditions containing Exclusion Clause 4.9 were supplied or communicated to the respondents. Therefore, the appellant could not rely upon the said exclusion clause for repudiating the insurance claim.
The Commission further noted that, from the discharge summary, the insured person (Smt. Kusum Gupta) was admitted to Deepak Memorial Hospital on 11.02.2014 with complaints of breathlessness, chest pain, and body ache, and thereafter diagnosed with obstructive sleep apnoea and obesity with OSA, OHS, LRTI, Type-II respiratory failure, pulmonary hypertension, and CAD. Thus, it was evident that the insured person was admitted for the treatment of the aforesaid medical complaints and not for any treatment relating to morbid obesity or weight control. The appellant had also failed to place on record any material to establish that the insured person was suffering from the aforesaid medical conditions at the time of taking the insurance policy. In the absence of any such material, the repudiation of the claim merely on the ground that the insured person was suffering from obesity could not be sustained.
Regarding the quantum of compensation, the District Commission had awarded Rs 1,80,000 as reimbursement of claim for hospitalization and medical expenses, Rs 75,000 towards mental agony and harassment, and Rs 10,000 towards litigation expenses. Considering that the respondents were required to pursue the claim for reimbursement of medical expenses incurred towards the treatment of Smt. Kusum Gupta, followed by repudiation of the claim and prolonged litigation, the Commission found no sufficient ground to interfere with the compensation awarded by the District Commission.
In view of the above discussion, the Commission found no infirmity in the conclusion reached by the District Commission that the repudiation of the claim was unjustified and amounted to deficiency in service. The Commission agreed with the reasons given by the District Commission and found no cause or reason to reverse the findings of the District Commission. Consequently, it upheld the order dated 16.05.2024 passed by the District Consumer Disputes Redressal Commission-I, North District, Govt. of NCT of Delhi, Ground Floor, Court Annexe-2 Building, Tis Hazari Court Complex, Delhi-110054.
Resultantly, the present appeal stands dismissed with no order as to costs.
The Verdict
The appeal by National Insurance Co. Ltd. was dismissed. The District Commission’s order dated 16.05.2024 is upheld, directing the opposite party to pay Rs 1,80,000 as reimbursement of hospitalization and medical expenses, with interest at 9% p.a. from 20.04.2014 till payment, Rs 75,000 as compensation for mental agony and harassment, and Rs 10,000 towards litigation expenses, all within 30 days from receipt of the order; failing which, interest at 12% p.a. from the date of expiry of the 30-day period shall apply. No costs were awarded.
What This Means For Similar Cases
Insurer Must Prove Supply of Policy Terms
An insurer seeking to rely on an exclusion clause must first prove that the terms and conditions containing such clause were supplied to and brought to the notice of the insured. Mere assertion that the insured was aware of the terms is insufficient without documentary proof of delivery or acknowledgment.
Exclusion Clause Not Applicable Without Communication
If an exclusion clause has not been communicated to the insured, the insurer cannot claim the benefit of that clause to repudiate a claim, even if the alleged condition falls within the exclusion’s scope.
Burden on Insurer to Show No Pre-existing Condition
When repudiating a claim on the ground of a pre-existing condition (e.g., obesity), the insurer must place on record material establishing that the insured suffered from such condition at the time of taking the policy; otherwise, the repudiation is unsustainable.
Compensation for Mental Agony and Litigation Costs Upheld
Awards for mental agony, harassment, and litigation expenses are not interfered with where the complainant has been compelled to pursue litigation due to the insurer’s unjustified repudiation and deficient service.
Interest on Delayed Payment
If the insurer fails to pay the awarded amount within the stipulated period, it becomes liable to pay higher interest (12% p.a.) from the expiry of the initial payment window, reinforcing timely compliance.
