Gurdaspur District Commission Holds Cholamandalam General Insurance Company Liable For Repudiating Valid Insurance Claim

The District Consumer Disputes Redressal Commission, Gurdaspur (Punjab) bench comprising of Lalit Mohan Dogra (President) and Bhagwan Singh Matharu (Member) held Cholamandalam General Insurance Company liable of deficiency in services for falsely repudiating the claim citing non-supply for the documents by the Complainant. The bench directed it to pay Rs. 85,800 to the Complainant and expressed concerns over the repudiation of valid claims in an overly technical manner.

Brief Facts:

Mrs. Surjit Kaur (“Complainant”), and her husband Darshan Lal were joint account holders with Oriental Bank of Commerce (“Bank”), now merged into Punjab National Bank. Cholamandalam General Insurance Company (“Insurance Company”) introduced the Complainant and her husband to a health/medical insurance policy for senior citizens. The Complainant and her husband obtained the policy, with premiums automatically deducted from their account. The policy numbers changed yearly. There were two premium deductions for the insurance policies of Rs. 7,866/- and Rs. 15,929/- in the first and third years, respectively. Later, despite medical treatment, including hospitalization, the Complainant paid Rs. 80,800 out-of-pocket. The insurance company failed to process the claim despite receiving the necessary documents from the Complainant. The Complainant made several communications with the insurance company and the bank but didn't receive a satisfactory response from them. Feeling aggrieved, the Complainant filed a consumer complaint in the District Consumer Disputes Redressal Commission, Gurdaspur, Punjab (“District Commission”).

In response, the bank contended that the Complainant, as the account holder, voluntarily transferred Rs. 7,866/- in February 2020 and Rs. 15,929/- in March 2022 to the insurance company. The bank, following norms and RBI instructions, asserted no knowledge or involvement in the repudiation of the claim by the insurance company.

The insurance company claimed that the Complainant lacked locus standi and cause of action. It argued that the Complainant breached good faith by concealing health-related information during policy issuance. Further, it stated that the Complainant didn't submit the necessary documents to the insurance company.

Observations by the Commission:

Referring to the insurance company's argument that it rejected the claim due to the non-supply of certain documents, the District Commission noted that the insurance company did not clarify the necessity of these documents or even attempted to obtain the documents through its channels or efforts. The District Commission noted that the discharge summary of the hospital provided by the Complainant indicated the date of admission and prescribed medications. Therefore, the District Commission held that the discharge summary clearly stated all the required information and the insurance company failed to state which additional information was required from the Complainant.

Further, the District Commission emphasized that insurance companies should not be overly technical or demand documents beyond the control of the insured during the claims settlement process. Consequently, the District Commission held that the repudiation of the claim by the insurance company based on non-supply of documents was illegal. Therefore, the District Commission held the insurance company liable for deficiency in service. The insurance company was directed to pay Rs. 80,800/- to the Complainant along with interest at 9% per annum from the date of the order until realization. Additionally, the insurance company was instructed to pay Rs. 5,000/- to the Complainant as compensation for mental tension, harassment, and the cost of litigation.

Case Title: Surjit Kaur vs The Oriental Bank of Commerce and Others

Case No.: C.C. No. CC/223/2022

Advocate for the Complainant: Shri Sushil Sharma (For Complainant 1)

Advocate for the Respondent: Shri Arun Kumar (For O.P. No. 1), Ms Kajal Bhagat (For O.P. No. 2), Shri Sandeep Ohri (For O.P. No. 3)

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