The Delhi State Consumer Disputes Redressal Commission dismissed an appeal by Oriental Insurance Co. Ltd., upholding a District Forum order that directed payment of Rs. 2,70,409 with 6% interest for a repudiated health insurance claim. The Commission held that mere history of diabetes and cerebrovascular accident does not constitute a pre-existing disease warranting claim rejection unless the insured was hospitalised for those conditions in near proximity to policy inception. The insurer failed to discharge its burden of proving knowing concealment, and its reliance on exclusion clause 4.1 was unjustified where policy terms were not supplied to the insured.
Background & Facts
The Dispute
The respondent, Mr. Dev Dutt Chawla, purchased a Health Shield Insurance Policy (No. 272900/48/2014/12481) from Oriental Insurance Co. Ltd. for the period 05.12.2013 to 04.12.2014, paying a premium of Rs. 9,600 with a sum insured of Rs. 5,00,000. On 30.01.2014, he was admitted to Action Medical Institute with acute coronary syndrome, underwent coronary angiography, was shifted to Sir Ganga Ram Hospital for bypass surgery, and discharged on 13.02.2014. He submitted two claims - Rs. 60,034 on 08.02.2014 and Rs. 2,18,584 on 18.02.2014 - which the insurer repudiated citing pre-existing diseases (diabetes mellitus for 10 years and cerebrovascular accident for 3 years) under exclusion clause 4.1.
Key Facts
- Policy inception: 05.12.2013; premium Rs. 9,600; sum insured Rs. 5,00,000
- Hospitalisation: 30.01.2014 at Action Medical Institute; bypass surgery at Sir Ganga Ram Hospital; discharge 13.02.2014
- Claims submitted: Rs. 60,034 (08.02.2014) and Rs. 2,18,584 (18.02.2014)
- Repudiation ground: Exclusion clause 4.1 - pre-existing diseases excluded for first three years of continuous coverage
- Insurer alleged: DM for 10 years, CVA for 3 years as per hospital records
- Respondent alleged: Terms and conditions not supplied with policy document
- District Forum deducted Rs. 8,209 for medical consumables from claimed Rs. 2,78,618, awarding Rs. 2,70,409
Procedural History
- Date of complaint filing: Not explicitly stated; District Forum order references "date of filing of the present complaint"
- 31.03.2017: District Forum (East), Saini Enclave, Delhi passed judgment in CC-421/2014 allowing complaint
- 06.06.2017: First Appeal No. 313/2017 instituted before Delhi State Consumer Disputes Redressal Commission
- 09.01.2016: Date of reserving order (appears to be a typographical error in judgment caption)
- 28.10.2026: Judgment pronounced by State Commission dismissing appeal
The Parties' Positions
Appellant (Oriental Insurance): Contended that exclusion clause 4.1 validly excluded pre-existing diseases for first three years; respondent suffered from DM (10 years) and CVA (3 years) as per hospital records; terms and conditions were available on websites mentioned in policy schedule; no objection raised by respondent since policy inception; District Forum erred in ignoring policy terms and evidence.
Respondent (Dev Dutt Chawla): Denied all allegations; submitted that District Forum properly scrutinised material; terms and conditions never supplied; no hospitalisation for DM or CVA near policy inception; repudiation unjustified.
Relief Sought
Appellant sought setting aside of District Forum order dated 31.03.2017. Respondent sought dismissal of appeal. District Forum had awarded: Rs. 2,70,409 with 6% interest from date of complaint filing, Rs. 25,000 compensation for mental agony inclusive of litigation expenses, compliance within 30 days, failing which 9% interest on Rs. 2,95,409 from date of complaint filing till realisation.
The Legal Issue
The central question was whether the insurer's repudiation of a health insurance claim on the ground of pre-existing diseases (diabetes and cerebrovascular accident) was justified under exclusion clause 4.1 where the insured had not been hospitalised for those conditions in near proximity to policy inception, and whether the insurer discharged its burden of proving knowing concealment of material facts.
Arguments Presented
For the Appellant
Oriental Insurance argued that exclusion clause 4.1 of the Health Shield Policy expressly excluded coverage for pre-existing diseases during the first three years of continuous coverage. It contended that hospital records explicitly mentioned the respondent's history of diabetes mellitus for 10 years and cerebrovascular accident for 3 years, constituting material non-disclosure at the proposal stage. The insurer invoked the principle of utmost good faith (uberrimae fidei) in insurance contracts, submitting that suppression of such material facts entitled it to reject the claim. It further argued that the policy schedule referenced its website for terms and conditions, which constituted sufficient communication, and that the respondent had not objected to non-receipt of physical documents since policy inception.
For the Respondent
Mr. Chawla submitted that the District Forum had correctly appreciated the evidence. He maintained that diabetes and hypertension are normal wear and tear of modern life and cannot be treated as pre-existing diseases warranting claim repudiation unless the insured was hospitalised for them near the policy date. He emphasised that the terms and conditions were never supplied to him, and the insurer failed to rebut this allegation. He relied on the ten conclusions laid down by this Commission in Pradeep Kumar Garg v. National Insurance Co. Ltd. (FA-482/2005) to argue that mere medical history without recent hospitalisation does not constitute concealment.
The Court's Analysis
The Commission, per Member (Judicial) Ms. Pinki, undertook a detailed examination of the legal framework governing pre-existing disease exclusions in health insurance. It began by affirming the well-settled principle that the burden to establish suppression of material facts lies entirely upon the insurer. The insurer must prove by cogent and reliable evidence that: (i) the insured was suffering from a pre-existing disease at policy inception, (ii) such disease was material to the risk, and (iii) the same was knowingly concealed.
The Commission placed decisive reliance on its own precedent in Pradeep Kumar Garg v. National Insurance Co. Ltd. (FA-482/2005, decided 01.08.2008), which articulated ten conclusions on the meaning of "disease" and "pre-existing disease" in mediclaim policies. Key among these:
"(iii) Malaise of hypertension, diabetes, occasional pain, cold, headache, arthritis and the like in the body are normal wear and tear of modern day life which is full of tension at the place of work, in and out of the house and are controllable on day to day basis by standard medication and cannot be used as concealment of pre-existing disease for repudiation of the insurance claim unless an insured in the near proximity of taking of the policy is hospitalized or operated upon for the treatment of these diseases or any other disease."
"(vii) Claim of any insured should not be and cannot be repudiated by taking a clue or remote reference to any so-called disease from the discharge summary of the insured by invoking the exclusion clause or non-disclosure of pre-existing disease unless the insured had concealed his hospitalization or operation for the said disease undertaken in the reasonable near proximity as referred to above."
"(x) Non-disclosure of hospitalization/or operation for disease that too in the reasonable proximity of the date of mediclaim policy is the only ground on which insured claim can be repudiated and on no other ground."
The Commission also cited the National Commission's decision in Tarlok Chand Khanna v. United India Insurance Co. Ltd. (RP-686/2007, decided 16.08.2011), which held that the onus to prove pre-existing disease rests on the insurer, and Praveen Damani v. Oriental Insurance Co. Ltd. (RP-1696/2005), which cautioned against interpreting exclusion clauses so broadly that "no claim is payable under the mediclaim policy as every human being is born to die and diseases are perhaps pre-existing in the system totally unknown to him."
Further, the Commission referred to LIC of India v. Sunita & Others (2020 SCC OnLine NCDRC 710), where the National Commission, following the Supreme Court in Sulbha Prakash Motegaoneker v. LIC of India (Civil Appeal No. 8245 of 2015, decided 05.10.2015), held that suppression of pre-existing disease information, if unconnected to the cause of death or claim event, does not disentitle the claimant.
On the facts, the Commission found that the appellant failed to place any document showing the respondent was hospitalised or operated upon for diabetes or CVA in the near proximity of policy inception (05.12.2013). The mere mention of medical history in the discharge summary for the cardiac event was insufficient. Additionally, the appellant did not rebut the respondent's specific allegation that terms and conditions were not supplied. Merely referencing a website in the policy schedule does not establish actual communication of the complete terms to the insured. The Commission also noted the insurer issued the policy without medical examination, and having taken that risk, must honour the claim.
The Verdict
The appeal was dismissed. The District Forum's order dated 31.03.2017 was upheld in full. The appellant is directed to pay Rs. 2,70,409 (Rs. 2,78,618 minus Rs. 8,209 for medical consumables) with interest at 6% per annum from the date of filing of the complaint, plus Rs. 25,000 as compensation for mental agony inclusive of litigation expenses. The amount must be paid within 30 days of receipt of the order; failing which, 9% interest on Rs. 2,95,409 will accrue from the date of complaint filing till realisation. No order as to costs in the appeal. Pending applications, if any, stand disposed of.
What This Means For Similar Cases
Hospitalisation Near Policy Inception Is the Touchstone
A mere history of chronic conditions like diabetes or hypertension, however long-standing, does not amount to a "pre-existing disease" justifying claim repudiation under standard exclusion clauses. The insurer must prove the insured was hospitalised or underwent surgery for that specific condition in reasonable proximity to the policy date - typically within six months to a year. Practitioners should demand production of hospitalisation records for the alleged pre-existing condition, not just references in discharge summaries for the current ailment.
Burden of Proof Remains Firmly on the Insurer
The insurer bears the entire burden of establishing: (a) existence of pre-existing disease at policy inception, (b) materiality to risk, and (c) knowing concealment. This burden cannot be shifted by pointing to hospital records that mention past history in passing. Where the insurer issues a policy without pre-issuance medical examination, it assumes the risk and cannot later rely on its own omission to avoid liability.
Non-Supply of Policy Terms Constitutes Deficiency in Service
Merely printing a website URL in the policy schedule does not discharge the insurer's obligation to supply terms and conditions. The Commission affirmed that failure to provide the complete policy document - including exclusion clauses - to the insured amounts to deficiency in service. Practitioners should specifically plead and prove non-receipt of terms; the insurer must then produce evidence of actual delivery (courier receipts, acknowledgment, email logs), not just website references.
- Actionable takeaway: In claim repudiation cases, file RTI applications or seek discovery for the insurer's pre-issuance underwriting file, medical examination records (if any), and proof of policy document dispatch.
- Actionable takeaway: Cross-examine the insurer's witness on the specific steps taken to communicate exclusion clauses - website reference alone will not suffice.
- Actionable takeaway: Cite the Pradeep Kumar Garg ten conclusions as a comprehensive framework for challenging pre-existing disease rejections in consumer fora.
