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Manmohan Nanda v. United India Insurance Co. Ltd.

Civil Appeal · 2021 INSC 826Decided 6 Dec 2021
Civil Appeal No. 8386 of 2015
Dr. Justice D.Y. Chandrachud · Justice B.V. Nagarathna

Background

Manmohan Nanda, a type-II diabetic, took out an overseas mediclaim policy before travelling to the USA, disclosing his diabetes and undergoing a medical check-up arranged by the insurer, who then issued the policy. In the USA he suffered a cardiac episode and underwent emergency angioplasty. The insurer later repudiated his claim for around USD 2,29,719 in hospital bills, alleging he had concealed a pre-existing heart condition (based on his having taken cholesterol-lowering "statin" medication). The National Consumer Disputes Redressal Commission upheld the repudiation, and Nanda appealed to the Supreme Court.

Decision Breakdown

The Supreme Court held that the appellant had fully disclosed his diabetes at the time of applying, and that the insurer, as a "prudent insurer," reviewed his medical reports and chose to issue the policy anyway, so it could not later claim surprise. Taking statins as a precaution against complications of diabetes is not the same as having a pre-existing cardiac disease, and the sudden heart attack in the US was not shown to be a direct, foreseeable consequence of the diabetes that was disclosed. Applying the principle that ambiguous policy exclusion clauses must be read against the insurer who drafted them (contra proferentem), the Court held the repudiation illegal, directed the insurer to indemnify the appellant's full medical expenses with 6% interest, and awarded Rs. 1,00,000 in litigation costs.

Lesson Learnt

An insurer cannot refuse a genuine medical claim by stretching an exclusion for "pre-existing disease" to cover an unrelated, unforeseen medical emergency, especially where the policyholder honestly disclosed their known health condition at the time of taking the policy.

Official source (sci.gov.in)View Judgment (PDF)

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