National Consumer Disputes Redressal
National Insurance Company Ltd. vs I.A.S. Officers Association & Ors. on 8 October, 2014
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 549 OF 2008 (From the order dated 29.12.2007 in First Appeal No. 1192 of 2006 of the Maharashtra State Consumer Disputes Redressal Commission Mumbai) National Insurance Company Ltd. A subsidiary of the General Insurance Corporation of India, Regional Office, 12, Jamsheji Tata Road, Mumbai 400 020 Through Manager, Delhi Regional office I, Jeevan Bharati, Tower II, Connaught Circus, New Delhi ... Petitioner Versus 1. I.A.S. Officers Association Maharashtra Branch, Through its Honorary Secretary, Shri Satish Tripathi, Mantralaya, Mumbai 400 032 2. Members of the above Association listed in the scheme to the complaint . Respondents BEFORE: HONBLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER For the petitioner Mr. Vishnu Mehra, Advocate Ms. Sakshi Gupta, Advocate For the Respondents 4 & 25 For other Respondents Mr. R.K. Kohli, Advocate Ms. Shreya Suri, Advocate NEMO PRONOUNCED ON : 08th OCTOBER, 2014 O R D E R
JUSTICE V.K. JAIN, PRESIDING MEMBER The petitioner-National Insurance Company Ltd. issued Medi-claim Policies to the members of the complainant-IAS Officers Association, Maharashtra Branch, on the terms which inter-alia covered all the pre-existing illnesses, did not stipulate any waiting period for the medical cover and provided facility for the insurance of the family members of the insured at 20% premium. The pre-acceptance check-up was also dispensed with for the members of the complainant association and a floating cover was provided to them, whereby unutilized cover in respect of one family member could be used by other members of his family. After expiry of the policy period of one year, the members of the Complainant Association sought renewal of the policy issued to them but the Petitioner Company refused to renew the said policy on the old terms and conditions. The insurance company wanted the members of the complainant association to take new Medi-claim policy on the revised terms, which inter-alia included increase in premium and curtailment of concessions and benefits available to the members of the family of the insured. The complainant-association and its members then filed a complaint before the District Consumer Disputes Redressal Forum, Mumbai, seeking the following reliefs:
(a) Permission may be granted to the Complainant Association to prosecute this complaint on behalf of all its 50 members listed in the schedule who are aggrieved by the failure of the opposite party to renew their policies on the same terms as were included in their initial policies;
(b) The opposition party be held to be guilty of unfair trade practice and also of deficiency in service as defined in the Consumer Protection Act;
(c) The opposite party be directed to renew the policies issued to each member listed in the schedule on the same terms on which they were initially issued. They may also be directed to condone all delays in renewal in case of non-renewal because of the unilateral change brought about.
(d) In cases where policies have been renewed for a smaller member of beneficiaries the Opposite Party be directed to include the omitted names in the new policies on the old terms. Any excess amounts paid by the members over and above what is due for renewal on same terms as before be ordered to be refunded by the Opposite Party;
(e) The Opposite Party be directed to pay; to each of the 50 members of complainant listed in the annexed schedule Rs.20,000/- as compensation for the forced and wrongful loss of cover and Rs.10,000/- as special damages for harassment and mental and physical agony suffered by them at the time of renewal;
(f) The opposite party be directed to pay Rs.2,00,000/- as compensation to the complainant Association for loss of face and credibility suffered by the Association a result of the Opposite Partys unfair trade practice and deficiency in service;
(g) Having regard to the nature of the case and the adverse consequences of the loss of cover for many of the aged members who are senior citizens hearing of this case be expedited;
(h) Costs of these proceedings be provided for.
2. The complaint was resisted by the insurance company, inter-alia on the grounds that the insurance policy, being a contract, it was not obligatory on it on renew the same on existing terms and conditions.
It was also claimed that the benefit of covering pre-existing illnesses was withdrawn since the policies to the aforesaid IAS Officers Association were issued purely on experimental basis.
3. The District Forum, vide its order dated 17.5.2006, directed the insurance company to renew the policies and extend the insurance cover with retrospective effect.
4. Being aggrieved from the order of the District Forum, the insurance company approached the concerned State Commission by way of an appeal. The said appeal having been dismissed vide impugned order dated 29.12.2007, the insurance company is before this Commission by way of this revision petition.
5. A perusal of the impugned order would show that the insurance company, inter-alia submitted before the State Commission that the policy in question was a tailor made policy sanctioned by its Mumbai Office, without approval from the Head Office.
The question arising for consideration of this Commission is as to whether the insured is entitled to renewal of a Medi-Claim policy as a matter of right or not. The issue of renewal of Medi-claim policy came up for consideration of the Honble Supreme Court in United India Insurance Company Limited Vs. Manubhai Dharmasinhbhai Gajera & Ors. (2008) 10 SCC 404 and after considering the case law on the subject, the Apex Court, inter-alia observed and held as under:
44. All mediclaim insurance policies, a pro forma whereof has been brought to our notice, contain almost identical clauses, some of which are:
4.0 The company shall not be liable to make any payment under this policy in respect of any expenses whatsoever incurred by any insured person in connection with or in respect of:
4.1 All diseases/injuries which are pre-existing when the cover incepts for the first time.
4.2 Any disease other than those stated in Clause 4.3, contracted by the insured person during the first 30 days from the commencement date of the policy. This exclusion shall not, however, apply if in the opinion of the panel of medical practitioners constituted by the company for the purpose, the insured person could not have known of the existence of the disease, of any symptoms or complaints thereof at the time of making the proposal for insurance to the company.
This Condition 4.2 shall not, however, apply in case of the insured person having been covered under this scheme or group insurance scheme with any of the Indian insurance companies for a continuous period of preceding 12 months without any break.
4.3 During the first year of the operation of the policy, the expenses on treatment of diseases such as cataract, benign prostatic hypertrophy, hysterectomy for menorrhagia or, fibromyoma, fistula in anus, piles, sinusitis and related disorders are not payable. If these diseases are pre-existing at the time of proposal they will not be covered during subsequent period of renewal too.
5.9 The policy may be renewed by mutual consent.
The company shall not however be bound to give notice that its due for renewal and the company may at any time cancel this, policy by sending the insured 30 days notice by registered letter at the insureds last known address and in such event the company shall refund to the insured a pro rata premium for unexpired period of insurance.
The company shall, however remain liable for any claim which arose prior to the date of cancellation. The insured may at any time cancel this policy and in such event the company shall allow refund of premium at companys short period rate only (table given here below) provided no claim has occurred up to the date of cancellation.
46. One important facet of the matter which must also be taken note of is duty on the part of a State to act fairly. Such a fair dealing is expected at the hands of State within the meaning of Article 12 of the Constitution of India. Strong reliance has been placed by Mr. Parekh on the decision of this Court in Mahabir Auto Stores V. Indian Oil Corpn, and Shrilekha Vidyarthi Vs. State of U.P. There cannot be any doubt whatsoever that Article 14 of the Constitution of India which encompasses within its fold obligations on the part of the State to act fairly which operates also in the contractual field, but the said principle would be applicable more in a case where bargaining power is unequal or where the contract is not a negotiated one and/or is based on the standard form contracts between unequals.
50. As a proposition of law, where a renewal is based on mutual consent, there may be no automatic renewal as has also been held by this Court in H.P. Corpn. Ltd. V. Kolhapur Agricultural Market Committee but as would be discussed hereinafter; a mediclaim policy where a senior citizen is involved would stand somewhat on a different footing.
It will depend upon the contract entered into between the parties and the statutes operating in the field as also constitutional scheme. We do not agree with the submission of the learned Solicitor General that wherever renewal is subject to mutual consent to the parties, a State may at its whims and caprice refuse to renew.
6. It would thus be seen that a Medi-claim policy can be renewed only with the mutual consent of the insurer and the insured and cannot be claimed as a matter of right. This of course, is subject to a rider that wherever the insurer happens to be State within the meaning of Article 12 of the Constitution of India, it cannot refuse such a renewal, arbitrarily. The action of a Public Sector Insurance Company needs to be guided by considerations of fair play and reasonableness. It is not open to such a company to refuse renewal of an existing policy, without giving cogent reasons which, if challenged would be open to scrutiny before an appropriate forum such as a Consumer Forum.
7. The next question which then arises for consideration is as to whether the decision of the petitioner company not to renew the policies issued to the members of the IAS Officers Association was founded on the considerations of the justice, fair play and reasonableness or not. As noted by the Honble Supreme Court in Manubhai Dharmasinbhai Gajera & Ors. (Supra), all the Medi-claim insurance policies exclude from reimbursement the expenses incurred by the insured for the treatment of a pre-existing disease. However, admittedly, the Medi-claim policies issued to the members of the IAS Officers Association contained no such exclusion, meaning thereby that even the pre-existing diseases were covered under the said policies. As noted by the Honble Supreme Court, such policies exclude reimbursement of the expenses incurred for a disease contracted by the insured during the first date of the commencement of the policies, unless the disease, in the opinion of the medical practitioner of the company, could not have been known to the insured nor did he have any symptoms or the complaints of the said disease.
However, there was no such exclusion in the Medi-claim policies issued by the petitioner company to the members of the IAS Officers Association. The Honble Supreme Court noted that during first year the policy exclude treatment of diseases such as Cataract, benign prostatic hypertrophy, hysterectomy, piles, sinusitis etc. and if these diseases are pre-existing at the time of taking the insurance cover, they are not covered even during the renewal period of the policy. Again, there was no such exclusion in the policies issued to the members of the complainant association, which resulted in a situation where diseases such Cataract, BPH, hysterectomy, piles, sinusitis etc., even if they existed at the time of taking the policy for the first time, would be covered throughout the policy period, including the period for which the policy is later renewed. The petitioner has listed a number of features, which distinguish the policies issued to the complainants from the regular Medi-claim policies issued by the company. The said distinguishing features are as under:
(i) Cover with ore-existing diseases;
(ii) Floater cover based on cover for all family members covered under the policy;
(iii) Cover for only family members at concessional rate of 20% premium;
(iv) Though called group policy, it is issued for an individual member and no minimum size of the group is stipulated.
8. It is thus evident that the insurance company went out of its way and granted a number of concessions and benefits to the members of the IAS Officers Association, which it was not granting to the ordinary policy holders. No reasonable justification has been shown for giving the aforesaid preferential and privileged treatment to the members of the IAS Officers Association. It is not as if the insurance company charged a higher premium from the members of the IAS Officers Association as a consideration for granting the aforesaid concessions and privileges to them.
Therefore, there is no escape from the conclusion that the concerned officer of the insurance company, who approved the aforesaid concessions and benefits to the members of the IAS Officers Association, was swayed by the stature of the policy holders and the position they held on account of being the members of the premier Civil Servants.
In fact, the learned counsel for the petitioner company clearly stated during the course of arguments that the officer who issued the Medi-claim policies to the members of the IAS Officers Association had no authority to grant such concessions and benefits to the insured persons.
9. Considering that the policies issued to the members of the IAS Officers Association carried benefits and concessions, which were not available to the common policy holders, the decision of the insurance company not to renew the said policies on the terms and conditions tailor made for the members of the IAS Officers Association cannot be said to be unreasonable, unfair or arbitrary. There is no reason why the petitioner company, which is State, within the meaning of Article 12 of the Constitution of India, should give a preferential and favourable treatment to the members of the IAS Officers Association and grant them the benefits and concessions which are not available to other policy holders.
It is not as if the petitioner company is altogether refusing to renew the policies it had issued to the members of the IAS Officers Association, the petitioner company is ready and willing to renew the policies on the terms and conditions which are applicable to other such policies issued by it. This will also ensure that the complainants are not prejudiced in any manner, on account of the discontinuance of the policies issued to them. If they are getting renewal on the terms and conditions applicable to other policy-holders they cannot say that had they known that the policy would not be renewed, they would have gone to some other insurer. If the complainants are agreeable for renewal of the policies on the terms and conditions applicable to other policy holders of the company, nothing prevents them from obtaining renewal on those terms, but they cannot insist on the renewal of the policies on the terms and conditions which were specially designed and custom made for them.
10. For the reasons stated hereinabove, the impugned order passed by the District Forum and State Commission are hereby set aside and the complaint is dismissed. No order as to costs.
.Sd/-..
(V.K. JAIN J.) PRESIDING MEMBER SB/6