National Consumer Disputes Redressal
New India Assurance Co. Ltd. vs Smt Manish Abhay Bedmutha And Anr on 10 October, 2013
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION No. 3741 of 2008 (From the order dated 07.07.2008 of the Maharashtra State Consumer Disputes Redressal Commission, Mumbai in Appeal no. 1478 of 2007) New India Assurance Company Ltd., Divisional Office 1st Floor, Near CBS Old Agra Road Petitioner Nasik 422 002 (Maharashtra) Through Manager Regional Office 1 Jeevan Bharti Building 124 Cannaught Circus New Delhi 110 001 Versus Smt Manish Abhay Bedmutha Resident of Post Ghoti Tal: Igatpuri District Nasik 422 002 (Maharashtra) Nasik Merchant Co-operative Bank Ltd. Administrative Office A 16 Industrial Estate Respondents Babubhai Rathi Chowk Satpur, Nasik 422 002 (Maharashtra) BEFORE: HONBLE MR JUSTICE V B GUPTA PRESIDING MEMBER HONBLE MRS REKHA GUPTA MEMBER For the Petitioner Mr Kishore Rawat, Advocate For Respondent no. 1 Mr Sunil C Surana, Advocate For Respondent no. 2 Ms Jyoti U Panwalkar, Advocate Pronounced on 10th October 2013 ORDER
REKHA GUPTA Revision petition no. 3741 of 2008 has been filed under section 21 (b) of the Consumer Protection Act, 1986 against the order dated 07.07.2008 passed by the Maharashtra State Consumer Disputes Redressal Commission, Mumbai in First Appeal no. 1478 of 2007.
The facts of the case as per respondent no. 1/ complainant are as follows:
The respondent no. 1 submits that as a wife/ widow of the deceased Dr Abhay Bansilal Bedmutha, the respondent no. 1 is the legal heir of the deceased Dr Abhay Bansilal Bedmutha who was the consumer of the petitioner. The respondent no. 1 is therefore, entitled to file the instant complaint against the petitioner.
The respondent no. 1 submits that deceased Dr Abhay Bansilal Bedmutha had a bank account with respondent no. 2 - Bank and was a shareholder/ member of the respondent no. 2 Bank. The deceased was a consumer of both the Insurance Company as well as the Bank.
The respondent no.1 submits that respondent no. 2 - Bank canvassed a Group Janata Personal Accident Insurance Scheme for all of its shareholders/ members, floated by the insurance company. Accordingly, the deceased Dr Abhay Bansilal Bedmutha purchased the said accident insurance policy for Rs.5,00,000/- under the Group Janata Accident Insurance policy bearing no. 47/98/300232 from the Insurance Company through the Bank and paid premium amount of Rs.340/- to the insurance company by the deceased Dr Abhay Bansilal Bedmutha towards the insurance coverage through the Bank. The said accident insurance policy was valid for 12 years from the date of purchase thereof i.e., till 17.11.2010 and the same was/ is still valid on the date of accident vis--vis the death of the deceased. Rs.5,00,000/- is the amount assured against any type of disability and in case of death. All the necessary records and particulars regarding the said accident insurance policy coverage concerning to the deceased are in possession of the insurance company.
On 14.10.2008 at about 07.00 p m while going to Vashi on his Hero Honda bearing registration no. MH 03 U 824, at Sion-Panvel Road, near New Toll Naka, in the jurisdiction of Vashi Police Station, the deceased Abhay Bansilal Bedmutha was unfortunately hit by an S T Bus of MSRTC from behind and sustained grievous bodily injuries.
Immediately the deceased was taken to the M G M N Hospital, Vashi. However, on admission the deceased was declared dead.
The respondent no. 1 being a widow and legal heir of the deceased Dr Abhay Bansilal Bedmutha, submitted duly filled in claim application to the Bank on 13.11.2006 with the request to process her claim of assured insurance amount of Rs.5,00,000/-. Thereafter, the Bank, after filling the required information in the said application, sent the said application to the insurance company along with all the necessary documents viz., claim application, a copy of the FIR and Panchnama, Death Certificate and Memorandum of Post Mortem Report dated 14.10.2006, issued by NMMC General Hospital, Post Mortem Centre, Vashi and other related papers for processing the claim of the respondent no. 1 as per the insurance policy. The said claim application along with the other referred documents have been duly submitted in the office of insurance company by the Bank.
Thereafter the insurance company vide letter dated 06.12.2006 informed the Bank with a copy marked to respondent no. 1 rejecting the claim on the ground that petitioner had cancelled the insurance policy of the deceased allegedly with effect from 04.06.2002 and also as the claim allegedly lodged is after the purported date of cancellation of the policy. However, no such information of alleged cancellation of the insurance policy was ever given to the deceased or to any of its relatives/ legal heir, as falsely claimed by the Insurance Company.
The respondent no. 1 further submitted that the alleged act of the insurance company was unilateral and arbitrary cancellation of policy of the deceased was not only illegal, bad in law, absurd, void-ab-intio but also untenable in law. The insurance company had neither informed the reasons of alleged cancellation of policy prior to the date of the cancellation nor sought any consent prior to the alleged cancellation of policy either to the deceased or the insurance company, nor refunded the premium amount of Rs.340/- so collected by the insurance company for the insurance coverage, when the insurance company allegedly cancelled the policy. Respondent no. 1 therefore, submitted that the aforesaid alleged act of unilateral and arbitrary cancellation of the policy of the deceased and rejection of the claim by the insurance company was nothing but an attempt to avoid the payment of guaranteed insurance amount of Rs.5,00,000/- by illegal and improper means. Therefore, the said alleged action of the insurance company are required to be set aside and they were directed to pay the assured insurance amount of Rs.5,00,000/- with compound interest on monthly basis, at the prevailing market rate.
The petitioner/ opposite party no. 1 in their report before the District Consumer Disputes Redressal Forum, Nasik (the District Forum) while admitting that there was Janata Personal Accident (Group) Policy of Rs.5,00,000/- of the deceased through the Bank by the Insurance Company bearing no. 47/00344 with endorsement no. 47/30232 stated that the same was subsequently cancelled with effect from 04.06.2002 under the terms and conditions of the policy authorising the company to terminate the same at any time and accordingly such notice dated 20.05.2002 was given to the Bank which was duly received by it. Not only this policy was cancelled but the policy of all other branches of NAMCO Bank were also cancelled at the same time. However, while cancelling the policy the pro-rata premium was required to be refunded as per condition no. 5 of the terms and conditions of the policy which was not done by the company and as such there was technical-cum-legal hitch in treating the policy as cancelled legally. Thus, the said cancellation of policy had automatically became infructuous.
The accident in the present case seems to have taken place on 14.10.2006 but prior to that the insurance company vide its letter no. 410 dated 06.09.2006 had informed the Bank, Ghoti Branch about the cancellation of policy with effect from 15.09.2006 and had sent a consolidated cheque no. 91913 dated 05.09.2006 of Bank of India for Rs.59,056/- towards refund of proportionate premium in each case to be refunded to concerned members of the Bank of Ghoti Branch but strangely enough the Bank had returned the amount by DD no. 817633 vide letter dated 15.09.2006 for no just and proper reason unilaterally and that too without the knowledge/ consent of the insured persons including the deceased of the company. The Bank ought not to have returned the amount of refund of pro-rata premium to the insurer. By returning that amount, the bank had run a risk of compensation for future period, i.e., from 15.09.2006. In order to safeguard Banks interest and risk, the insurance company had sent back that DD to the Bank vide its letter dated 07.02.2007 through which it was also again apprised of the fact that irrespective of the fact whether they accept the cheque/ DD or not, this company would not be at risk (liability) with effect from 15.09.2006, in view of the cancellation of policy and refund of pro-rata balance premium as per condition no. 5 of the policy. Bank was also asked to refund the aforesaid premium to the members concerned as per the list which had been already forwarded to them vide Companys earlier letter.
As the subject policy was a group accident policy through the Bank it was not expected to inform each and every individual by the insurance company when the Bank was under obligation to inform of the development with regard to the policy to its members.
The Bank having accepted the refund of pro-rata premium for the period from 15.09.2006 onwards they or the respondent/ complainant cannot now say that the policy was in existence on the date of death of the deceased in this case.
The written statement of respondent no.
2/ opposite party no. 2 has not been filed. However, as per the order of the District Forum the respondent no. 2 had openly taken the side of the complainant and they have declared and the fault is given to the OP no. 1. According to their (Bank) saying they have no concern with the above dispute and they should be released from the above case and such prayer they have been made.
After hearing the learned counsel for the parties, the District Consumer Disputes Redressal Forum, Nasik (the District Forum) observed that the opposite party no. 1 is taking the shelter of conditional no. 5 which is out of the conditions which are the terms and conditions of the agreement deed. According to condition no. 5, that after giving the written notice the insurance policy can be cancelled and the right of which is with the Insurance Company this notice is to be sent to that person who had taken the policy. But before how many days the notice is to be given about which it is not clearly mentioned in it. In spite of it, in our opinion, it is essential the limitation of generally within 30 days. The insurance company has been admitted that they have given the notice to the opposite party no. 2 only of the cancellation of the policy. The opposite party no. 1 had mentioned the same under paragraph no. 7 B in their written statement that it is not expected to send the notice to every consumer personally. It means that the opposite party no. 1 had not sent any notice to any consumer about the cancellation of the policy. In this way the opposite party no. 1 has violated the condition no. 5. In this section he had been given the right to cancel the policy. But in our (Forums) opinion they cannot do that. The explanation of which we are giving further.
The limitation of the policy is for 12 years it means from 18.11.1998 to 17.11.2010 and on this faith the deceased Dr Abhay and others have taken or purchased the policy and if that policy cancelled in the mid period then this is breach of trust of the consumers which we feel. It is OK till that period when the recovery of the money is done from the consumer and till that period when the interest of which is remained and obtained and when it is traced out about the damages the policy is to be cancelled which is not framed in the legality.
The opposite party no. 1 had filed one letter to the last moment, the date of which is 23.09.2001. In this letter the opposite party no. 1 had shown such reasons at the time of cancellation of the policy that the number of consumers was increased in the period of three years and on account of which we are facing a loss in a very big extent, therefore, we are cancelling the insurance policy. What is the type of this justice which is beyond to the imagination, these companies shown the temptation at first, then contribute the money, they earn the benefit of it and when the turn comes to giving the money then they breach their promises and agreement. For such system there is no shelter or base of act. It is OK that they were having the right to cancel the policy. But why this policy is cancelled the strong reasons of which is wanted which is given by the Gujarat High Court in its judgment and about which instantly we have mentioned according to the above given.
The opposite party no. 1 had which insurance policy was cancelled in the year 2002 that was taken back and after that the policy was cancelled from 15.09.2006. This information was given to the opposite party no. 2 by the opposite party no. 1 on 06.09.2006. The opposite party no. 1 (Insurance Company) had sent one letter with the demand draft and sent one letter to the Ghoti Branch and it is mentioned in it that after date of 15.09.2006 they are not responsible. Therefore, the date of the letter is very much important. Deceased Dr Abhay Bedmutha had died due to an accident on 14.10.2006 and after that nearly about four months that amount sent to his widow under the reference of prereted. The meaning of it is as such that the insurance policy was live till 07.02.2007 and before it Dr Abhay Bedmutha had died. In these circumstances, also the right for getting the full policy amount is with the respondent/ complainant certainly, according to the law.
In our opinion the opposite party no. 2 had no concern about to take and give the policy in any kind in the above case. No error is seen in their services. The error is seen certainly in the service of the opposite party no. 1 they had vitiated the agreement.
They therefore gave the following order:
(i) The complainant application of the complaint against the opposite party no. 1 is admitted with the expenses of Rs.5000/-.
(ii) The opposite party no. 1 should pay Rs.5,00,000/- and the interest at the rate of 18% per annum from 13.11.2006 till that period to getting the full payment. Similarly for the mental/ psychological harassment the damages amount of Rs.10,000/- should be given to the complainant within 30 days and if the delay is occurred for making the payment then the opposite party no. 1 should pay the interest rate of 12% per annum.
(iii) The complaint application is dismissed without any expenses against the opposite party no. 2.
Aggrieved by the order of the District Forum, the petitioner/ OP no. 1 filed an appeal before the State Commission. The State Commission also held that such a cancellation is bad in law and cannot be acted upon. Therefore Forum below in our considered view rightly held that complainant was entitled to get benefit of policy, since the said policy was cancelled arbitrarily and not following the provisions contained in clause no. 5 of the policy, whereby company was given unilateral right to cancel the policy. When Insurance Company is cancelling the policy, it has to cancel the policy strictly as per clause no. 5 of the said policy and if clause no. 5 is not properly followed, then Insurance Company cannot be heard to say that they had followed clause no. 5 and cancelled the Janata Personal Accident Group Insurance policy pertaining to respondent no. 1. In this view of the matter order passed by the Forum below is appearing to be just and proper. Even affidavit filed on behalf of Insurance Company mentions that they have committed legal blunder while cancelling the policy with effect from 04.06.2002 when in fact they had not refunded pro-rata premium to all the policy holders. So company has committed violation of terms mentioned in clause no. 5 of the terms of the said policy and therefore, they cannot take benefit of cancellation clause. Forum below therefore rightly passed on award against the appellant and we are finding no merit in this appeal. Hence, at the stage of admission itself, appeal will have to be rejected summarily. Hence, the following order:
Appeal stands rejected summarily. Miscellaneous application for stay stands disposed of.
Hence, the present revision petition.
The main grounds for the revision petition are as follows:
The cancellation of the policy was strictly as per the terms and conditions of the policy and the Honble Supreme Court and the Honble Commission has held that if the policy is cancelled in terms of the policy condition, the same cannot be challenged by the insured. The policy condition no. 5 contemplates that the cancellation notice has to be sent to the insured and such notice shall be deemed sufficiently given if posted at the address of the insured last registered in the books of the company. In the present case as well as the registered letter was posted to the insured at the address given in the policy and available in the records of the petitioner company.
Once the policy was cancelled, the question of payment of claim does not arise. The complaint itself was not maintainable as there was no privity of contract between the complainant and the petitioner company. The complainant in any case was not entitled to challenge the cancellation in any manner as she was not privity to the contract. The cancellation having been not challenged by the insured could not have been challenged by the complainant.
The State Commission erred in recording the finding that the letter refunding the cheque was dated 07.02.2007 it is submitted that the cheque of refund of premium was sent vide letter dated 06.09.2006 and the Bank who is the insured under the policy was duly acknowledged the same on 09.09.2006. The finding of the State Commission therefore, is against the evidence on record. It is not understood as to from where the State Commission has taken this date as 07.02.2007.
The Fora below further erred in holding that the cancellation per se is illegal as the cancellation of the policy has not been informed to the individual member. It is submitted that the policy was issued in the name of the Bank. As per condition no. 5 of the policy, the termination notice has to be given to the insured. The notice was duly given to the insured on 20.05.202. It was therefore, the duty of the Bank to have intimated to the individual member/ account holder. If the bank has not intimated the cancellation to the individual member, the insurance company cannot be found at fault.
As submitted above, the cancellation of the policy was not challenged, either by the bank or the individual member on receipt of the cancellation letter in May 2002. Even after the refund of the premium in 2006, there was no protest of any kind either from the bank or from the individual member. In the circumstances, therefore, the widow of the deceased member cannot challenge the cancellation of policy. Right to challenge is vested with the Bank being the insured under the policy. The Consumer Fora cannot go into the correctness of the policy condition and the question as to whether the cancellation was valid or not. The jurisdiction of the Consumer Fora can only be invoked if there is a privity of contract. Once there is no privity of contract, the complainant is not a consumer and therefore, the complaint itself was not maintainable.
The complainant, if aggrieved, could have challenged the cancellation of the policy, if permissible in law in a writ jurisdiction and not under the Consumer Protection Act.
In any case the insurance company be held liable because of violation of Section 64 V B of the Insurance Act. The petitioner had already refunded the premium prior to the accident and therefore, in the absence of any premium, the insurance company cannot be held liable. If the premium has been retained by the bank and not refunded to the individual member, it is the Bank who is liable and not the insurance company.
Because in any case the interest awarded at 18% per annum by the District Forum is excessive, exorbitant and against the well settled law laid by this Commission and the Honble Supreme Court.
We have heard the learned counsel for the parties and have gone through the records of the case carefully.
A copy of the policy has been placed on record. It is seen from the policy that the policy was in the name of respondent no. 2, i.e., the Nasik Merchant Co-operative Bank Ltd.,/ OP - Bank and not in the name of respondent no. 1. Hence, when the petitioner invoked clause no. 5 of the conditions it issued a letter dated 20.05.2002 regarding cancellation of JPA (Long Term) Policy/ Endorsement no. 47/30109, 30232, 30647, 30704 and 30804. The said notice was issued to the Branch Manager of the NMC Bank Ltd., The letter reads as follows:
This has reference to your above mentioned policy/ endorsement.
We regret to inform you that as the claim ratio on the referred policy is very high we will be cancelling the policy, evoking our condition no. 5 with effect from ________ The condition no. 5 reads as under:
The company may at any time by notice in writing terminate this policy provided that the company shall in that case return to the insured the then paid premium in respect of such person respect of whom no claim has arisen, less prorate part thereof for the portion of the insurance period which shall have expired. Such notice shall be deemed sufficiently given if posted addressed to the insured at the address last registered in the Companys books and shall be deemed to have been received by the insured at the time when same would be delivered in the ordinary course of post.
Needless to mention that as the policy stands cancelled with effect from 04.06.2002 on claim of whatsoever nature will be entertained/ tenable/ payable for any damages occurred on or after 04.06.2002 which please note.
Thereafter the petitioner realised that since the said premium on this pro-rata part thereof for the portion of the current insurance period had not been released the said notice had become infructuous. Thereafter they sent another letter dated 06.09.2006 addressed to the Manager, Ghoti Branch of Nasik Merchants Co-operative Bank Ltd., which read as follows:
Subject : Long term JPA Policy issued for a period of 12 years from 1998 covering your shareholders and members vide our policy no.
152801/47/30 as per list attached issued to your branch for the period as per list attached.
We hereby notify you that Long Term JPA policy was issued for a period 12 years with effect from 1998 covering your shareholders and members vide aforesaid endorsement stands terminated.
Please note that we have already cancelled the aforesaid endorsement vide our letter dated NIL and accordingly proportionate premium being refunded to you. Consequent to the cancellation of the policy and refund of proportionate premium for the remaining period of ananta personal accident policy (group) A/C M/s Nasik Merchants Cooperative Bank. The New India Assurance Co. Ltd., will be discontinued and the company will no longer be on risk and will not be liable in respect of any claim arising under the said policy with effect from 15.09.2006.
Please find enclosed a cheque no. 91913 dated 05.09.2006 for Rs.59,056/-
being proportionate amount of premium refunded to you. This refund is being made on account of the policy holders on whose account you had obtained the above mentioned policy. Please take further necessary steps to refund the proportionate amount to shareholders/ members of the bank. The copy of the list of all your insured members that were covered under the policy is on your record.
Please note that the persons covered under the endorsement was as per list attached. Claims were reported on this endorsement, hence, refund of _____ persons were made through this payment.
As per the learned counsel for respondent no. 2, thereafter it had written to petitioner vide letter no. 15.09.2006 that:
Your letter with a cheque of Rs.59,056/- dated 09.09.2006 bearing no. 091913 of Bank of India, Shiwaji Garden Branch, Nasik is received in respect of aforesaid reference. In this respect your attention is invited to your letter of May 2002.
As per that letter you had intimated about the cancellation of policies with effect from 04.06.2002 but as per that letter and its annexure date of cancellation is shown as 15.09.2006 and that date onwards you have refunded the amount which is contrary to your letter of May 2002. As per your letter of May 2002, the Bank has published advertisement in daily Deshdoot dated 28.05.202 about the cancellation of JPA policies taken from your company for the amount of policy below Rs.1,00,000/-. However, while deducting the pro-rata it was necessary to deduct the amount upto 04.06.2002 and to send the amount for further remaining period. Similarly, it was necessary to give interest @ of 15% per annum on that amount for the period from the date of credit of that amount with you till the refund of that amount.
As you failed to do so we are sending herewith a pay order no. 817633 for Rs.69,056/- dated 15.09.2006 against the cheque sent by you vide your aforesaid letter, which may please be acknowledged and take the necessary action promptly.
Also note that policy would be in existence till date of refund of the amount with interest thereon for the remaining period from 04.06.2002 onwards.
The cheque was thus returned to respondent no. 2 by the petitioner vide letter dated 07.02.2007 stating that:
It is further stated that we had cancelled the policy with effect from 04.06.2002 no refund of proportionate premium as per condition no. 5 was refunded and due to this fact a legal hitch was created. Due to this hurdle we had to shoulder the liability (risk) even for further period from 05.06.2002 though the policy was cancelled earlier.
To overcome further liability, we have refunded the proportionate premium by the cheque of which was returned by you unilaterally and that too without the knowledge/ consent of the insured persons.
Hope the matter may now be cleared to you about the cancellation of policy, with effect from 04.06.2002 and refund of balance premium. It is further added to state that it was now, not necessary to refund the proportionate premium for the period from 05.06.2002 onwards, only after deducting the prorata premium upto 15.09.2006 especially in view of fact, that no refund was made at all while cancelling the policy with effect from 04.06.2002. In view of aforesaid facts the cancellation of policy with effect from 04.06.2002 has automatically became infructuous.
Your contention that the refund of premium should have been refunded with interest @ 15% from the date of receipt of premium through you till the time of refund is not correct and legal and as such the same is denied by us. However, in no way the prorata (proportionate) premium is required to be refunded with interest reiterating the fact that we were already on risk upto 14.09.2006 and cease to be on risk with effect from 15.09.2006.
Under such circumstances, you ought not to have returned the cheque of refund of balance of premium. By returning the cheque we feel that you had run a risk of compensation for future period i.e., from 15.09.2006. In order to safeguard your interest and risk we here by take liberty to send that demand draft back to you, which is enclosed for your further necessary action. You are also requested to note that irrespective of the fact whether you now accept the cheque or not, this company will not be at risk (liability) with effect from 15.09.2006, in view of the cancellation of policy and refund of balance premium after deducting prorata premium as per condition no. 5 of the policy.
Thus, it is advisable to accept the cheque and refund the proportionate premium to members concerned as per the list which we have already forwarded to you with our earlier letter.
Counsel for the respondent no.2 admitted that no information regarding cancellation of the JPA policy was sent to the individual beneficiaries even though the petitioner in their letter dated 07.02.2007 had clearly mentioned that by returning the cheque we feel that you had run a risk of compensation for future period i.e., from 15.09.2006. In order to safeguard your interest and risk we hereby take liberty to send the DD back to you for further necessary action. You are also requested to note that irrespective of the fact whether you now accept the cheque or not, this company will not be at risk/ liability with effect from 15.09.2006 in view of the cancellation of the policy a refund of balance premium after deducting pro-rata premium as per condition no. 5 of the policy.
It would appear that respondent no. 2 accepted this decision of cancellation of the JPA policy under clause 5 and also accepted by default that they would be liable for any compensation for the period from 15.09.2006 till such time the pro-rata premium was refunded to individual beneficiaries after due intimation of cancellation of the policy. Learned counsel for respondent no. 2 could not inform us as to when the premium has been refunded to respondent no.1.
Learned Counsel for the petitioner has given three citations of the National Commission:
In the case of Ashok Jain vs Oriental Insurance Co. Ltd., - 1 (2012) CPJ 150 (NC), wherein this Commission has observed that it is thus clear that in cancelling the insurance policy in question, the insurance company needed to write to the insured and not to the insured person. Perusal of the certificate of insurance shows that the State Bank of India Officers Association, Chandigarh Circle was recorded as the insured, whereas, Adesh Kumar Jain was recorded as the insured person. In other words, for cancellation of the policy it was sufficient for the insurance company to send notice only to the insured. Viz., the State Bank of India Officers Association, Chandigarh Circle. It is not in dispute that this was done by the Insurance Company. Hence, the contention of the learned counsel for the petitioner is not valid and cannot be accepted.
In the case of Usha Sharma and Ors vs New India Assurance Co. Ltd., and Ors, - I (2012) CPJ 488 (NC), this Commission has held that a perusal of the above condition would show that the insurance company was within the right to cancel the policy in question at any time provided the written notice are sent to the policy-holders and the balance premium for the unexpired/ uncovered policy period is returned to the insured. In the present case, as per condition no. 5 of the insurance policy, the policy in question was cancelled by the insurance company and intimation was sent to the policy holder by registered letter. Cheque of Rs.601/- towards balance premium was also returned to the insured. Public notice of cancellation was also given through newspapers and it was enough notice to the respondent regarding cancellation of the policy. Since, the policy was cancelled during the life time of the insured and due intimation was given to him along with cheque of balance premium, the insurance company was not liable to indemnify the complainants. Even the Honble Supreme Court in the case of United Indian Insurance Co. vs Harcharan Chand Rai Chandan Lal, IV (2004) CPJ 15 (S) = V (2004) SLT876 and National Insurance Company vs Laxmi Narain Dhut III (2007) CPJ 13 (SC) = IV (2007) SLT 102 = II (200&) ACC 28 (SC) has held that the policy is a contract between the parties and both the parties are bound by terms of contract.
In the case of Nand Kumari and Ors vs Oriental Insurance Co. Ltd., - I (2012) CPJ 357 (NC), the National Commission has held that. it is not in dispute before us that the policy could be cancelled at any time by the insurer as averred by the respondent in paragraphs no. 4 and 5 of its written version. The insured died on 22.07.2006. Policy had been cancelled by the respondent on 26.11.2000 and anintimation to that effect was sent to the insured by a registered letter addressed to him at the address given by him in the proposal form for obtaining the said policy. Intimation regarding cancellation was sent to the insured along with cheque off pro-rata premium drawn on Bank of India.
The present revision petition is covered by the three citations given. Undisputedly the group insurance policy had been cancelled vide letter 410 dated 06.09.2006 with effect from 04.06.2002 and intimation to this effect was given to the insured which is the Bank along with the intimation a cheque for Rs.59,056/- being proportionate amount of premium being refunded..
Counsel for the respondent has given two citations. The facts of the case do not apply to the case in hand.
In view of the above, we are of the view that the petitioner had cancelled the policy as per clause no. 5 of the terms and conditions of the policy which had been issued in favour of respondent no. 2 even giving the reasons for cancellation of the policy. Respondent no. 2 did not challenge the cancellation of the policy. Respondent no. 2 also failed to inform the individual beneficiaries including respondent no. 1 of cancellation of the policy and failed to refund the pro-rata premium sent to them vide letter dated 06.09.2006. They thus denied the opportunity to the petitioner and her husband to avail of an alternate policy, if they so desired. Petitioners husband Dr Abhay Bansilal Bedmutha died on 14.10.2008. Hence, the revision petition is allowed and the order of the District Forum is modified to the extent that complaint/ application of the complaint is admitted only against respondent no. 2 who should pay the expenses of Rs.5,000/- as also Rs.5.00 lakh with interest @ 9% per annnum from the date 13.11.2006 till that period to getting the full amount. Similarly for the mental/ psychological harassment the damages amount of Rs.10,000/- be given to the complainant within 30 days from the date of pronouncement of this order.
However, we would like to place on record that many cases have come to our notice that where the insurance company having offered attractive group insurance policies to various institutions for the benefit of their employees later unilaterally withdrew the same as in the instant case, where the claim ratio on the referred policy becomes high. This tantamounts to unfair trade practice. Beneficiaries are tempted by the offer of attractive terms and money and amounts are collected over the years and thereafter benefits are denied when they submitted their claims. The Insurance company unilaterally decide that group insurance policies so offered earlier be cancelled because they are no more financially viable and beneficial to them. A protocol or procedure for cancellation and informing the beneficiaries is also not laid down. Most often the individual remains unaware that they are no more covered for insurance, thus denying the benefit of insurance even though they have been paying the premium for the insurance policy over the years. Secretary, Ministry of Financial Service and Chairman IRDA may like to review such cases of cancellation of group insurance policies by public sector and private companies and take necessary action to ensure that the insurance companies cannot in future unilaterally cancel the group insurance policy after having offered the same. Even if it is to be cancelled it should be terminated not with retrospective effect, as the beneficiaries already covered should remain covered for the duration of the policy. Copy of this order may be sent Secretary, Department of Financial Services, Ministry of Finance, 3rd Floor, Jeevan Deep Building, Parliament Street, New Delhi 110 001 and Chairman, Insurance Regulatory and Development Authority, 3rd Floor, Parisrama Bhavan, Basheer Bagh, Hyderabad 500 004, Andhra Pradesh.
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[ V B Gupta, J.] Sd/-
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[Rekha Gupta] Satish