Bombay High Court Raps Insurer For Arbitrary Claim Rejection | Finds No Nexus Between Cancer And Alcohol Use Or Hypertension
Isabella Mariam
The Bombay High Court Single Bench of Justice Sandeep V. Marne set aside the Insurance Ombudsman’s Award dated 10 June 2024, which had previously upheld the rejection of the petitioner’s insurance claims amounting to Rs. 17,77,147/-. The court held that the insurer’s grounds for repudiation, based on alleged non-disclosure of alcohol consumption and hypertension, lacked material nexus with the ailment for which the claims were made.
The petitioner had secured a health insurance policy from M/s. Royal Sundaram General Insurance Company Ltd., which was regularly renewed since 2003 and covered both the petitioner and his wife. In 2021, the policy was ported to Care Health Insurance Ltd., the second respondent in the case. The ported policy included a normal floater insurance cover of Rs. 5,00,000/- and a top-up cover of Rs. 50,00,000/-, aggregating to Rs. 55,00,000/-. The petitioner paid a substantial premium of Rs. 13,23,634/- for a three-year policy term from 29 September 2021 to 28 September 2024.
In July 2022, the petitioner was diagnosed with Non-Hodgkin’s Lymphoma and underwent extensive medical treatments including chemotherapy and radiation. He submitted seven claims amounting to Rs. 17,77,147/-, which were repudiated by the insurer citing non-disclosure of the petitioner’s alleged daily alcohol consumption and pre-existing hypertension.
The petitioner contested these rejections through multiple communications, including emails and escalation to higher management, but the insurer maintained its stance, even threatening policy cancellation. Despite this, the insurer later sent renewal notices offering policy continuation on payment of premium.
During proceedings before the Insurance Ombudsman, the insurer primarily relied on the ground of non-disclosure of alcohol consumption, supported by documents and a purported tele-call recording. However, it did not specifically argue the issue of hypertension before the Ombudsman. The Ombudsman dismissed the complaint on the sole basis of non-disclosure of alcohol consumption, without addressing the hypertension ground.
The Court examined the insurer’s inconsistent stands, noting that in several claim denial letters, the ground of pre-existing hypertension was not mentioned at all. Even when raised, no concrete evidence was presented to establish that the petitioner’s alleged hypertension had any nexus with the cancer for which treatment was sought.
Justice Sandeep V. Marne observed: "There is absolutely no document before me from which it can be concluded that the Petitioner was in the habit of consuming alcohol every day."
The Court also recorded that the insurer failed to establish any link between the petitioner’s alleged alcohol consumption and the ailment of Non-Hodgkin’s Lymphoma. It found contradictions in the insurer’s claims, pointing out that the insurer continued to send renewal notices despite being aware of the petitioner’s health condition and alleged non-disclosures.
The Court further referred to the Supreme Court decision in Manmohan Nanda vs. United India Assurance Company Limited (2022) 4 SCC 582, which held that mere non-disclosure of a condition like hypertension, without establishing a causal nexus with the ailment for which the claim is made, cannot justify repudiation.
Justice Marne noted: "It is difficult to hold in the present case that pre-existing ailment of hypertension or occasional consumption of alcohol by the Petitioner was a material fact which would have affected the mind of the insurer while offering the insurance policy."
Additionally, the Court observed that the insurer continued to offer policy renewals even after becoming aware of all alleged non-disclosures and the petitioner’s medical history, which further weakened the insurer’s case.
The petition accordingly succeeds, and the Court passed the following order:
- Award dated 10 June 2024 passed by the Insurance Ombudsman is set aside.
- The second Respondent-Insurance Company is directed to pay to the Petitioner a sum of Rs. 17,77,151/- together with interest at the rate of 8% per annum from the date of filing of the complaint i.e., with effect from 14 July 2023.
Advocates Representing the Parties
For the Petitioner: Mr. Akshay Patil with Ms. Girija Balkrishnan, Mr. Jarin Doshi, and Ms. Devika Mahadekar i/b. M/s. Malvi Ranchoddas & Co.
For the Respondent: Mr. Rajesh Kanojia with Ms. Deepika Prabhala and Ms. Sangita Upadhyay i/b. M/s. Res Juris.
Case Title: Prakash Mehta vs. The Insurance Ombudsman for State of Goa and Mumbai Metropolitan Region & Care Health Insurance Ltd.
Neutral Citation: 2025: BHC-AS:21608
Case Number: WP-18745-2024-JR-FC
Bench: Justice Sandeep V. Marne
[Read/Download order]
