State Consumer Disputes Redressal Commission
The Oriental Insurance Company Limited vs Vikram Lakhotiya on 4 September, 2012
CHHATTISGARH STATE
CONSUMER DISPUTES REDRESSAL COMMISSION
PANDRI, RAIPUR (C.G.)
Appeal No.FA/12/130
Instituted on : 13.03.2012
The Oriental Insurance Company Limited,
Through - Divisional Manager,
Divisional Office, Parmanand Bhawan,
Near Dr. Rajendra Prasad Chowk, G.E. Road,
Durg, Tehsil & District Durg (C.G.) ... Appellant.
Vs.
Vikram Lakhotiya, S/o Late Shri Gokuldas Lakhotiya,
R/o : A/7, Mahesh Colony,
Durg, Tehsil & District - Durg (C.G.) ... Respondent.
PRESENT: -
HON'BLE JUSTICE SHRI S.C. VYAS, PRESIDENT
HON'BLE SHRI V.K. PATIL, MEMBER
COUNSEL FOR THE PARTIES: -
Shri L.K. Joshi, for appellant.
Shri R.K. Rastogi, for respondent.
ORAL ORDER Dated : 04/09/2012 PER: - HON'BLE JUSTICE SHRI S. C. VYAS, PRESIDENT This appeal is directed against, order dated 14.02.2012 of District Consumer Disputes Redressal Forum, Durg (C.G.) (hereinafter called "District Forum" for short), passed in Complaint Case No.239/2011, whereby the appellant/Insurance Company, has been directed to pay Rs.3,00,000/- which was sum insured under the "Happy Family Floater Policy" purchased by the complainant, along with interest @ 7% p.a. from the date of filing of the complaint till date // 2 // of payment and also to pay Rs.1,000/- as compensation for mental agony and Rs.1,000/- as cost of litigation.
2. Undisputedly, the complainant had purchased a "Happy Family Floater Policy" for himself, his wife and two daughters for seeking medical cover of Rs.3,00,000/- for each family members for a period between 31.03.2010 to 30.03.2011 from the appellant/Insurance Company He filed a claim before the Insurance Company on 23.02.2011 along with all necessary documents and medical bills and requested for payment of Rs.3,00,000/- on account of illness and treatment. The Insurance Company repudiated the claim on the ground that the policy issued in favour of the complainant was not a continuing policy and there was a gap of six days between the expiry of the last policy and first day under the present policy, therefore this policy would be treated as fresh policy and therefore claim preferred by the complainant before Insurance Company was not payable under Exclusion Clauses 4.1, 4.2 and 4.3 of the insurance policy.
3. Learned District Forum after having considered the rival contentions raised by both parties and taking note of Circular No.52/15/IRDA/Health/SN/08-09 dated 31.03.2009 of Insurance Regulatory and Development Authority (hereinafter called "IRDA" for short), copy of which was filed before it came to the conclusion that under the directions of IRDA, the policy would be treated as // 3 // continuing policy and therefore the Insurance Company is liable to pay the claimed amount. So by the impugned order, the directions for payment of Rs.3,00,000/- along with interest and cost were passed against the Insurance Company.
4. We have heard arguments advanced by both parties and perused the record of the District Forum.
5. Circular No.52/15/IRDA/Health/SN/08-09 dated 31.03.2009 of IRDA, has been brought on record before us by the respondent. This Circular has provided many things. It has been directed by the IRDA that "all health insurance policies shall contain a clause that provides for a mechanism to condone delays in renewal for upto 15 days from the renewal due date, so that the insured person(s) is / are treated as 'continuously covered' in terms of continuity benefits such as waiting periods and coverage of pre-existing diseases. This clause shall also specify further details of this mechanism, including the fact that coverage would not be available for the period for which no premium is received." Apart from it, some other directions have also been passed by the IRDA.
6. Learned District Forum has taken into consideration this Circular and concluded that under this Circular the policy can be treated as continuing policy and therefore so far as the health insurance is concerned, the Exclusion clauses will not be applicable.
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7. Learned counsel for the appellant/Insurance Company has drawn our attention towards Proviso of Exclusion Clause 4.3 of the Insurance Policy (Annexure D-4), which reads as under :-
"If the continuity of the renewal is not maintained with the Company then subsequent cover SHALL be treated as fresh policy and clauses 4.1., 4.2, 4.3 SHALL apply unless agreed by the Company and suitable endorsement passed on the policy. Similarly if the sum insured is enhanced subsequent to the inception of the policy, the exclusions 4.1, 4.2 and 4.3 will apply afresh for the enhanced portion of the sum insured for the purpose of this section." (Emphasis supplied by us).
8. From this Proviso, it is clear that if continuity is not made for renewal of the policy then there can be two results (i) because of discontinuing the policy, the exclusions clauses 4.1, 4.2 & 4.3 will be applicable afresh and (ii) in case of enhancement of the sum insured subsequent to the inception of the policy also, it has been again provided that exclusions 4.1, 4.2 and 4.3 will apply for enhanced portion of sum insured. Thus, it is clear that according to this provision of the policy the second portion of this Proviso is independent & separate from the first provision of discontinuity and has got nothing to do with continuity of the policy. Though the result of both things i.e. discontinuing the policy or enhancement of the sum insured is same but these two provisions are separate and distinct and it can very well be concluded that if policy is treated as continuing ignoring the delay of few days in seeking subsequent medical insurance cover as per the directions of IRDA even then if in the new // 5 // proposal, there is proposal of enhancement of sum insured, then for the enhanced portion of the sum insured again exclusion clauses will be applicable. From it, it is clear that as and when there is an enhancement of the sum insured, then for that enhanced portion pre- existing health conditions, will not be covered for a period of four years. The expenses incurred for any disease except those which are specified in Exclusion Clause 4.3 for first 30 days, will not be included and expenses on treatment of the ailments, which have been enumerated in Exclusion Clause 4.3, will not be payable for a period, which has been mentioned against the name of the ailment. These exclusions clauses are applicable in respect of enhanced portion of the sum insured because the terms of the renewal clearly states so, as per Circular of IRDA, Para 3 which says that "The terms of renewal shall also state the procedure and terms for enhancing the sum insured or scope of cover." However, they are not applicable in respect of the amount of existing insurance cover for which the delay in proposal for renewal was within a period of 15 days, so it can very well be concluded as per Circular of IRDA that these exclusions clauses will not be applicable as the health insurance policy was being purchased continuously for last so many years and claims were being paid by the appellant/Insurance Company to the same respondent/complainant on previous occasions also.
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9. Therefore, we are of the considered view that the respondent/complainant is entitled to receive Rs.1,25,000/- only against his claim for medical insurance cover for the year 2010 available under the insurance policy. He is not entitled to have benefit of the enhanced portion of the medical cover in respect of these pre- existing diseases in the first year.
10. Learned counsel for the respondent/complainant submitted that appellant/Insurance Company has failed to pay even that amount to the respondent/complainant and thus it committed deficiency in service as well as unfair trade practice and therefore suitable amount of compensation should be awarded on this head also.
11. The facts of the case show that the claim was preferred before appellant/Insurance Company on 23.02.2011 and the letter of repudiation (annexure D-5) was issued by the Insurance Company on 17.08.2011. In that letter also, it has not been specified that claim in respect of the enhanced amount of insurance is only rejected and the respondent/complainant is entitled to receive amount under the existing insurance over. Even aforesaid Circular of IRDA has not at all been referred by the Insurance Company, though it was in existence by that time, as it was issued on 31.03.2009. It is matter of common knowledge that as and when IRDA issues Circulars then those Circulars are sent to all Insurance Companies at the earliest first of all // 7 // and then only it is made available to other sources of Media for publicity so it cannot be digested that that Insurance Company was not aware of that Circular of IRDA under with for a period of 15 days, the continuity of insurance cover was required to be presumed for health insurance and claim was not required to be disallowed only on this ground by the Insurance Company. So, it is clear that the appellant/Insurance Company is guilty of deficiency in service and upto some extent of committing unfair trade practice by not taking into consideration the aforesaid Circular of IRDA and therefore, the respondent/complainant is entitled of award of some compensation under this head.
12. In view of aforesaid, the appeal preferred before us by the appellant/Insurance Company succeeds and is allowed. The impugned order is modified to the extent that at the place of Rs.3,00,000/-, the appellant/Insurance Company is directed to pay Rs.1,25,000/- to the respondent/complainant within a period of one month from today. Apart from it, the appellant/Insurance Company is further directed to pay Rs.50,000/- as compensation to the respondent/complainant on account of deficiency in service and unfair trade practice. Other directions, which have been passed by the District Forum, will remain as they are. With this modification in the // 8 // impugned order, the appeal is disposed of. No order as to the cost of this appeal.
(Justice S.C.Vyas) (V.K. Patil)
President Member
/09/2012 /09/2012