State Consumer Disputes Redressal Commission
Niac vs Prof. A.P.Mehta on 21 August, 2012
PUNJAB STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
DAKSHIN MARG, SECTOR 37-A, CHANDIGARH
First Appeal No.461 of 2008
Date of institution: 13.05.2008
Date of decision : 21.08.2012
New India Assurance Co. Ltd. having its Regional Office at SCO 36-37,
Sector 17-A, Chandigarh through Shri Maheshwar Dutt, Manager duly
constituted attorney.
.....Appellants
Versus
Professor A.P.Mehta resident of 88, Professor Colony, Tilak Nagar,
Amritsar.
.....Respondent
First Appeal against the order dated 01.04.2008
passed by the District Consumer Disputes
Redressal Forum, Amritsar.
Before:-
Sardar Jagroop Singh Mahal,
Presiding Judicial Member
Mr.Vinod Kumar Gupta, Member Argued by:-
For the appellants : Sh.Paul S. Saini, Advocate with
Sh.Parminder Singh, Advocate
For the respondents : Sh.D.C.Kumar, Advocate
JAGROOP SINGH MAHAL, PRESIDING JUDICIAL MEMBER
This is OP's appeal under Section 15 of the Consumer
Protection Act, 1986 (hereinafter referred to as the Act) against the order dated 1.4.2008 passed by the learned District Consumer Disputes Redressal Forum, Amritsar (in short the District Forum) vide which the OP was directed to revoke the illegal cancellation of the insurance policy of the complainant and renew it from the date it was cancelled after accepting the amount of premium. It was also directed to pay Rs.2000/- as compensation and Rs.1000/- as litigation expenses.
First Appeal No.461 of 2008 2
2. Professor A.P. Mehta complainant had been purchasing the mediclaim policy for himself and for his family members from the OP- appellant which were got renewed by him within time without any gap. The policy was last issued to him valid from 17.5.2005 to 16.3.2006 and its renewal was due on 17.3.2007. When the complainant went to the office of the OP-appellant on 8.3.2007 for renewal of the policy, it was done by the Development Officer, Jiwan Singh. No fresh proposal form was called for and the policy was issued on the basis of old proposal form. The complainant received the policy but the terms and conditions thereof were not supplied to him. On 6.4.2007, he received a notice from the OP- appellant who intended to cancel the said policy on account of higher claim ratio. The complainant made a detailed representation but even inspite of that, the policy was cancelled vide letter dated 15.5.2007 and a cheque for proportionate amount was sent to him. The complainant requested the OP- appellant against the cancellation but to no effect. The complainant, therefore, filed the present complaint for restoration of the insurance policy and for compensation to the tune of Rs.25,000/- alleging that it is unfair trade practice adopted by the OP.
3. The case of the OP-appellant is that since the policy has since been cancelled, there is no relationship of consumer and service provider between the parties and, therefore, the complaint is not maintainable. It was alleged that there was an adverse claim ratio with respect to the policy of the complainant, due to which, the Divisional Office refused to renew the same. However, the complainant got the policy renewed from the branch office without disclosing this fact to Jiwan Singh, Development Officer. It was admitted that earlier policies were issued to the complainant but there had been claims submitted by the complainant, due to which, it was an adverse First Appeal No.461 of 2008 3 claim ratio and the OPs, therefore, were not bound to renew the same. According to them, the policy could be cancelled in view of clause 13 of the same which was invoked by the OP to cancel the policy. It was denied if the OP can be directed not to cancel the policy or restore the same.
4. Both the parties were given opportunity to adduce evidence in support of their case.
5. After hearing the arguments of the learned counsel for the parties and perusing the record, the learned District Forum vide impugned order dated 1.4.2008 allowed the complaint in the manner stated above. The OP has challenged the same through the present appeal.
6. We have heard the arguments of the learned counsel for the parties and have gone through the record.
7. The learned counsel for the appellant has referred to Clause 13 of the policy Ex.R8, in view of which, the OP-appellants were competent to cancel the policy at any time by sending to the insured 30 days notice by registered letter. It is argued that in the present case, such a notice had been issued to the complainant, which is admitted by him as Ex.C6. The complainant was given an opportunity of being heard and he accordingly submitted his reply Ex.C7 which was considered by the OP and, thereafter, the policy was cancelled vide Ex.C8. The learned counsel for the OP- appellant has argued that the cancellation is perfectly legal and valid in view of the Clause 13 of the Insurance Agreement and, therefore, the impugned order passed by the learned District Forum being contrary to the agreement cannot sustain and should be set aside. We have considered the arguments advanced by the learned Counsel for the appellant but we are not convinced to accept it.
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8. No doubt, there is a clause 13 in the insurance agreement Ex.R8 which could be invoked by the OP to cancel the policy by giving 30 days notice by the registered letter to the insured. However, on what grounds the policy can be cancelled has not been mentioned in the contract of insurance. In any case, there is no express or implied term in the insurance policy Ex.R8 authorising the OP to cancel the policy on the ground of adverse claim ratio. If such an argument is accepted, that would mean that the OPs would apply Clause 13 arbitrarily and in a discriminatory manner depriving the benefit of mediclaim policy to that section of the society which needs it most. The mediclaim policy has been started for the benefit of the public and the cancellation of the policy on such grounds would defeat the very purpose thereof and would convert it into a business wherein the OP would sell the policy only to those persons from whom it has the chance to earn profits and would wriggle out of those contracts where it has to spend the money. We are afraid if that is the object of the mediclaim policy.
9. We have examined the authorities submitted by the learned counsel for the appellant but the same are not helpful to the appellant-OP. In case, Rachna Gupta v. Branch Manager, Oriental Insurance Company Limited and others III (2004) CPJ 560, the Hon'ble Chhattisgarh State Commission was seized of the matter where the accident policy covering the risk for 10 years was cancelled. In that case, it was not an arbitrary and discriminatory cancellation of the policy but the insurance company had taken a policy decision to cancel all the accident policies as mentioned in para 6 of the order. In the present case, there is no such policy decision taken by the appellant if all the medicalim policies have been cancelled by them. Moreover, an accident policy cannot be treated at par with a mediclaim policy. The second case referred to by the learned Counsel for the appellant First Appeal No.461 of 2008 5 is Simran Farms Ltd. v. United India Insurance Co. Ltd., III (2002) CPJ 359". In that case, the appellant was running hatchery and had got the chicks insured. The area where the hatchery was being run was high risk area. The appellant had lodged a claim of Rs.11,54,510/- and he was claiming interest thereon @ 18% per annum and was also claiming Rs.2 lacs for mental agony and torture and Rs.3 lac for loss of business. It was due to that reason that the policy was cancelled by the insurance company. The insurance of birds, however, cannot be compared with the medicalim policy. In that case, the complainant could shift the business to a place where mortality rate of the chicks was low. However, in the present case, the complainant has no such option. Both these authorities are, therefore, out of context and are not applicable in the present case.
10. The learned counsel for the complainant has referred to IRDA (i.e. Insurance Regulatory and Development Authority) Notification dated 26.4.2002. In Sub Clause (n) of Clause 7, it is provided that there could be provision for cancellation of the policy on ground of mis-representation, fraud, non-disclosure of material facts or non-cooperation of the insured. Admittedly, there was no such ground existing in the present case. The IRDA guidelines nowhere authorise the insure to cancel the policy where the claim ratio is adverse. Such a question arose before the Hon'ble Supreme Court in case "United India Ins. Co. Ltd. v. Manubhai, II (2008) CPJ 43 (SC)". In that case also, a mediclaim policy was obtained by the petitioner. He submitted certain claim and thereafter, when he wanted to get it renewed for the next year, the matter was delayed and the renewal was refused. Hon'ble Supreme Court in para 64 of the judgment held that the action on the part of the authorities of the appellant was highly arbitrary and the respondents were entitled to be treated fairly. It was held that only because First Appeal No.461 of 2008 6 the insured had started suffering from a disease, the same would not mean that the said disease shall be excluded. According to the Apex Court, if the insured had made some claim in each year, the insurance company should not refuse to renew the insurance policy only for that reason. In this manner, it was held that the renewal of the policy could not be refused if the insured had submitted the claim to the insured. In the present case, the action of the OP appellant is worse than that. They first issued a policy and thereafter, cancelled it on the ground that the claim ratio was adverse, meaning thereby, that the complainant was claiming the amount against each policy in excess of the premium paid by him.
11. In case "Biman Krishna Bose v. United India Insurance Co. Ltd. and another III (2001) CPJ 10 (SC)" the insurance company refused to renew the policy on the ground that the insured had resorted to litigation for payment of claim against the company. The Hon'ble Supreme Court held that it was unfair and arbitrary on their part and they cannot refuse to renew the policy merely because the appellant had approached the Consumer Forum and the Apex Court for redressal of his grievance. Such an act cannot be attributed as bad record to disentitle the appellant to get his policy renewed. In that case also, it was held that the decision of the insurer not to renew the policy was bad in law. The Hon'ble Patna High Court in case "Purnima Prasad and others v. Oriental Insurance Co. Ltd. and others, 2007 ACJ 2213" also came across with such a case wherein the insured was diagnosed suffering from cancer of abdomen and the insurer refused to renew the insurance policy on the ground that it had become more onerous for them. The Hon'ble High Court held that it was unfair approach of the insurance company which defeats the aims and objects of 1972 Act (i.e. General Insurance Business (Nationalisation) Act, 1972). It was held that the First Appeal No.461 of 2008 7 insurance company acting in public interest under an Act of Parliament and inspired by articles 47 and 21 of the Constitution cannot be permitted to create such handles for itself to refuse to renew the policy. The insurance company was held to be having statutory and social duty to take care of diseased citizens and was directed to renew the policy from the date of its renewal. In "Sumita Gupta and another v. New India Assurance Company Limited,, III (2007) CPJ 168", the insurer refused to renew a policy due to adverse claim ratio for the preceding two years. The Hon'ble Chhattisgarh State Consumer Disputes Redressal Commission held while relying upon the Hon'ble Supreme Court judgment in Biman Krishna Bose v. United India Insurance Co. Ltd. and another (supra) that the insurer cannot refuse to renew the said policy.
12. The learned counsel for the complainant respondent along with written arguments produced a notification issued by the United India Insurance Co. Ltd. in 2003 in which directions were given to the operating offices to the effect that the renewal cannot be denied if the claim ratio is adverse. The IRDA reiterated the same vide their letter dated 31.3.2009 holding that the renewal shall not be denied on the ground that the insured had made the claims or claim in the previous or earlier years. The law is, therefore, now well settled that the renewal of the mediclaim policy cannot be denied on the ground that the claim ratio is adverse and the medical insurance policy issued by the appellant cannot be cancelled on any such ground.
13. The OP appellants have alleged that the complainant respondent had been claiming compensation from them which had been in excess of the amount of premium paid by him and there was, therefore, adverse claim ratio with respect to this policy. There is, however, no such allegation or First Appeal No.461 of 2008 8 proof if any of the claims submitted by the complainant respondent was not payable or he was not entitled to the amount claimed by him. If the claims submitted by the complainant respondent were genuine and he was entitled to the payment of the compensation in respect of those claims, no fault can be found by the OP in this respect and the policy issued by them cannot be cancelled nor the renewal of the said policy can be refused.
14. In view of the above discussion, we are of the opinion that the action of the OP-appellant in cancelling the policy on any such ground was bad in law and cannot sustain. The learned District Forum, therefore, rightly allowed the complaint and the impugned order is perfectly legal and valid. There is no merit in this appeal and the same is, accordingly, dismissed with costs. The litigation costs are assessed at Rs.10,000/-.
15. The appellants had deposited an amount of Rs.1500/- with this Commission at the time of filing of the appeal on 13.5.2008. This amount of Rs.1500/- with interest, if any, accrued thereon, if any, be remitted by the registry to the respondent-complainant by way of a crossed cheque/demand draft after the expiry of 45 days.
Copies of the orders be supplied to the parties free of costs.
(JAGROOP SINGH MAHAL) PRESIDING JUDICIAL MEMBER (VINOD KUMAR GUPTA) MEMBER August 21, 2012.
Paritosh