Wrong Repudiation Of Insurance Claim By ICICI Lombard; NCDRC Confirms Deficiency Of Service

The complainant/ respondent is the wife and legal heir of late Sh. Dharambir Saini and the appellant is a general insurance company. The husband of the complainant took a home loan against a property from the ICICI Bank amounting to Rs.75,00,000/- and in order to secure the loan the husband was insisted by the bank to take an insurance policy. He was informed by the Bank that they had a tie up with the Appellant, a subsidiary company, and they shall purchase the insurance policy for him. The insurance policy assured that in case of any mishap the appellant would be liable to pay the bank loan amount. Also, no documents regarding the insurance policy were given to the husband by the appellant or the bank and the insured was unaware of the terms and conditions of the said policy.

In 2015, the insured was admitted to a hospital and expired due to septic shock with MODS. The complainant sent all the necessary documents to the appellant for disbursement of the claim but it was repudiated on the grounds that the claim did not fall within the terms and conditions of the said policy. The complainant then informed the bank about the same but to no avail. Aggrieved by the same, the complainant approached the Delhi state commission.

The appellant insurance company submitted that the complaint was filed without any cause of action and that crucial past medical history of Diabetes and Tuberculosis was not disclosed by the insured in the proposal form. They further stated that The Insurance Policy along with booklet containing terms and conditions was duly served upon the Complainant/Respondent's husband vide letter dated 16.10.2013. There was no deficiency on the part of the Appellant, as the claim was not covered under the Policy in question. The Delhi state commission deleted the bank from the array of parties as the complainant had paid the entire loan amount to the bank and there was no cause of action against the bank.

The national commission observed that MODS( Multiple Organ Dysfunction Syndrome) was not covered by the policy even though as per the medical literature it is a life threatening condition.it was noted that MODS is a systemic, dysfunctional inflammatory response that requires long Intensive Care Unit (ICU) stay. It may be because of many reasons, including major trauma, burns, pancreatitis, aspiration syndromes, extracorporeal circulation, multiple blood transfusion, ischaemia – reperfusion injury, autoimmune disease, heat-induced illness, eclampsia, poisoning/toxicity etc. Hence, even if MODS is not covered under the policy it does not mean that it is not fatal or that people can die only due to the consitions mentioned in the policy. The bench noted that the appellant cannot take the plea that MODS was not covered under the policy.

The commission further observed that there was no proximity between the alleged pre-existing diseases (diabetes and tuberculosis) and the cause of death. Further, it was also highlighted in the order of the Delhi state commission that the insured was not supplied with the terms and conditions of the policy and was unaware of them. Therefore, the further submission of the appellant that its liability in the present case in the principal amount outstanding the books of the bank cannot be accepted.

In the light of aforementioned discussion the bench observed that the order of Delhi state commission that directed the appellant to pay the insured a sum of Rs.75,00,000/- with interest was perfectly justified. However the bench further note that the direction of the Delhi state commission to pay Rs.3,00,000/- as compensation was not warranted as the compensation in the form of interest has already been granted by the Delhi State Commission. The compensation under multiple heads cannot be awarded and the same view has been taken by the Hon'ble Supreme Court in the Case of DLF Homes Panchkula Pvt. Ltd. Vs. D.S. Dhanda, Etc. and DLF Homes Panchkula Pvt. Ltd. & Anr. Vs. Sudesh Goyal. The bench accordingly deleted the said direction.

Case: ICICI LOMBARD GENERAL INSURANCE COMPANY LTD. V. NEEMA SAINI

FIRST APPEAL NO. 746 OF 2021

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