National Consumer Disputes Redressal
Oriental Insurance Co. Ltd. vs M/S. R.K. Marble Ltd. on 24 January, 2017
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 2591 OF 2014 (Against the Order dated 13/01/2014 in Appeal No. 708/2010 of the State Commission Rajasthan) 1. ORIENTAL INSURANCE CO. LTD. 88 JANPATH, CONNAUGHT PLACE, HEAD OFFICE, NEW DELHI - 1 ...........Petitioner(s) Versus 1. M/S. R.K. MARBLE LTD. MAKRANA ROAD,MADAN GANJ, KISHAN GARH, DISTRICT : AJMER RAJASTHAN ...........Respondent(s)
BEFORE: HON'BLE DR. B.C. GUPTA,PRESIDING MEMBER HON'BLE MR. PREM NARAIN,MEMBER For the Petitioner : Mr. S.L.Gupta, Advocate For the Respondent : Mr. Surya Prakash Gandhi, Advocate Mr. Amit Gandhi, Advocate Dated : 24 Jan 2017 ORDER
1. This revision petition has been filed by the petitioner against the order dated 13.01.2014 of the State Consumer Disputes Redressal Commission, Rajasthan, (in short 'the State Commission') passed in First Appeal No.708 of 2010.
2. Brief facts of the case are that the complainant/respondent took group insurance policy for the employees of respondent/complainant, which was valid for ten years from 16.06.1997. Aggrieved by the action of the petitioner, the complainant filed consumer complaint before the District Forum, Consumer Protection, Ajmer, (in short 'the DistrictForum'), which was accepted vide its order dated 27.09.2006 as under:-
"7. Resultantly, the complaint of the complainants against the respondent, insurance company is accepted and the respondent insurance company is directed that the letter vide which the respondent insurance company has cancelled the policies, that letter dated 22.03.2002 is quashed because by that cancellation the complainant is not bound and the policy which has been taken by the complainant that should be revived and those policies shall be treated as in continuation because the letter of cancellation of policies issued by the respondent insurance company has been quashed and if any amount of premium is payable by the complainant, that shall have to be paid to the respondent insurance company. If any amount of the complainant remains due with the respondent insurance company on account of the cancellation of policies, interest @ 9% per annum shall be payable on that amount for that period. Rs.1,000/- would also be payable for compensation towards mental agony and expenses of complaint. The entire process shall have to be carried out by the insurance company within two months from the date of order.
If the respondent insurance company wants then the awarded amount can be directly paid to the complainant or deposit the awarded amount with the Forum. If the respondent insurance company wants to deposit the awarded amount with the Forum then the awarded amount shall be deposited through demand draft payable in the name of complainant under intimation to the complainant."
3. Aggrieved with the order of the District Forum, the petitioner preferred an appeal before the State Commission, which was dismissed vide its order dated 13.01.2014.
4. Hence the revision petition.
5. Heard the learned counsel for the parties and perused the record.
6. Learned counsel for the petitioner stated that polices in question have been terminated in accordance with Clause 5 of the conditions of the policy, wherein it is clearly provided that the company may at any time by notice in writing cancel this policy provided that the company in that case return to the insured the unutilized premium. Thus, the Insurance Company/petitioner has proceeded as per this Clause. The Insurance is a contract between the insured and the insurer and if the contract allows the termination of the contract during the duration of the contract, there is no illegality if the termination is affected. The District Forum allowed the complaint on the ground that the terms and conditions were not supplied, so exclusions are not applicable. The State Commission dismissed the appeal on the ground that the manager of the petitioner stated in the evidence that policy was to be cancelled with effect from 07.04.2002 rather than from 08.03.2002 as stated in the letter dated 22.03.2002. In fact, as per Condition No.5 of the policy, the insurance company decided to cancel all the Janta Personal Accident Insurance Policies, (JPA) having sum insured of more than Rs.1,00,000/-. Accordingly, a letter dated 22.03.2002 was sent as notice to the complainant for cancellation of the policy. The letter dated 22.03.2002 reads as follows:-
"Your kind attention is solicited towards Condition No.5 that is "Cancellation Condition" of the aforesaid Policy Exercising the said Condition we hereby give you notice for cancellation of the said policy from the midnight of 08th March 2002. As from 00.00 hours of 07.04.2002 the policy shall cease to be effective and no claim whatsoever shall be entertained under the said policy thereafter."
7. Another letter dated 28.03.2002 was also issued to the complainant again informing the same position. Thus, the Company has complied with the provision given in Condition No.5 and policies have been cancelled after due notice as per the conditions of the insurance contract. Thus, there is no illegality in the matter.
8. Coming to the matter of delay in filing the revision petition, learned counsel for the petitioner stated that there has been a delay of 62 days in filing the revision petition. The delay has occurred due to the reason that the original certified copy was received on 16.1.2014, which was misplaced. Thereafter on 21.4.2014, the fresh certified copy was obtained. Thereafter the Jaipur Office had sought the opinion of the Panel Advocate of Jaipur for filing the revision petition. Thereafter the R.O. Jaipur had sent the file to the Head Office at Delhi. On 23.6.2014, the revision petition was drafted by the counsel and sent through special messenger for approval and signature of concerned person. Thus, the delay is due to misplacement of the certified copy and then in following due procedures of the Company. The delay has been inadvertent and unintentional and therefore, the delay may be condoned as the petitioner's case on merit is very strong.
9. On the other hand, the learned counsel for the respondent/ complainant stated that the letter giving notice was issued on 22.03.2002, wherein it is clearly stated that the polices will stand cancelled with effect from midnight of 08.03.2002. The learned counsel wondered how the notice can be issued for cancellation from a back date? First of all, the condition No.5 has been added in the terms and conditions only to justify unfair trade practice and policy cannot be cancelled during the pendency of the policy, if the premium for the full period has already been paid. It is a clear case of unfair trade practice. The premium stands paid for the total period of 10 years. The learned counsel relied upon the case of New India Assurance Company Ltd. through Manager, Regional Vs. Smt. Manish AbhayBedmutha&Anr., 2013 (4) CPR 567 (NC), wherein the following has been observed:
"20. 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-110001 and Chairman, Insurance Regulatory and Development Authority, 3rd Floor, Parisrama Bhavan, Basheer Bagh, Hyderabad 500004, Andhra Pradesh."
10. Learned counsel for the respondent further argued that the polices in question were the group insurance police and the premium was paid for full 10 years. In such condition, the policies cannot be terminated before completion of 10 years and the Insurance Company is guilty of unfair trade practice.
11. In respect of delay in filing the revision petition, It was argued by the learned counsel for the respondent that the petitioner has himself mentioned in the application for condonation of delay that the certified copy taken on 16.01.2014 was misplaced and then another copy was obtained on 24.4.2014. Thus, the petitioner himself has been negligent in pursuing his case. The reason for condonation of delay has been given as the time taken in official procedure and correspondence. The Hon'ble Supreme Court in the case of Postmaster General&Ors. Vs. Living Media India Ltd. &Anr. (2012) 3 SCC 563, has held that for government departments and agencies, delay due to official procedures and internal communications cannot be considered as reasonable and sufficient cause of delay. The learned counsel also placed reliance on decision of the Hon'ble Supreme Court in Anshul Aggarwal vs. New Okhla Industrial Development Authority, IV (2011) CPJ 63 (SC), wherein it has been observed that special limitation periods have been prescribed in the Consumer Protection Act, 1986, so that the consumer disputes are settled in time. The National Commission has also relied upon this judgment in Bhagirath Cold Storage Vs. Harinarayan&Ors., 2016 (3) CPR 193 (NC).Hence, the application for condonation of delay needs to be rejected.
12. We have carefully considered the arguments advanced by both the learned counsel for the parties and have examined the record. A simple perusal of Condition No.5 shows that no notice period is mentioned in this clause. The Clause 5 of the conditions reads as follows:-
"5. The company may at any time by notice in writing cancel this Policy provided that the company in that case return to the insured the then last paid premium less a pro-rata part thereof for the current 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 company books and shall be deemed to have been received by the insured at the time when the same would be delivered in the ordinary course of post.---"
13. The above clause seems to be totally one sided as no notice period is mentioned and service of this notice has been treated as sufficient, if sent on the recorded address. Meaning thereby, even if the notice is not received by the insured, this clause will be applicable. The notice given on 22.03.2002 is also not very clearly worded. One part of it says that the notice was being given for cancellation of the said policy from the midnight of 08th March 2002. Then it goes on to say that from 00.00 hours of 07.04.2002 the policy shall cease to be effective and no claim whatsoever shall be entertained under the said policy thereafter. As we understand, it seems that the company intended to give one month notice and wanted to inform that one month notice starts from 08.03.2002 and policies will cease w.e.f. 07.04.2002, but it is not clear as to wherefrom the period of one month has been presumed by the company. The petitioner is a limited company and has vast experience of insurance. The notice dated 22.03.2002 or letter dated 28.02.2002 do not mention any reason for cancelling these policies. Even if the Company derives powers from condition no.5, it cannot act arbitrarily. The policy is a contract between the insured and insurer based on mutual trust and even if this clause was to be implemented by the Insurance Company, the same should have been acted in the spirit of natural justice.
14. After a deep and careful examination of the judgement referred by the learned counsel for the respondent in the case of New India Assurance Company Ltd. through Manager, Regional Vs. Smt. Manish Abhay Bedmutha & Anr. (supra),, we find that even in this case, this Commission has finally not found deficiency with the Insurance Company and has not cancelled the order of the Insurance Company for termination of the policy, rather this Commission has found deficiency with the bank which had not communicated the order of termination of the policy issued by the Insurance company, though anger and anguish has been expressed by this Commission on such unilateral termination of policy midway. In fact, this Commission has noted in New India Assurance Company Ltd. through Manager, Regional Vs. Smt. Manish Abhay Bedmutha & Anr.,(supra),the following:
"13. Learned Counsel for the petitioner has given three citations of the National Commission:
14. In the case of Ashok Jain v. Oriental Insurance Co. Ltd., 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".
15. In the case of Usha Sharma and Ors. V. New India Assurance Co. Ltd., and Ors., 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 Hon'ble 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."
16. In the case of Nand Kumari and Ors. Vs. Oriental Insurance Co. Ltd., 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."
17. 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."
15. From the above, it is clear that the contract of insurance between the insured and the insurer has been honoured by this Commission in the case of New India Assurance Company Ltd. through Manager, Regional Vs. Smt. Manish Abhay Bedmutha & Anr., (supra), which has taken into account the decision of the Hon'ble Supreme Court in the case of United Indian Insurance Co. Vs. Harcharan Chand Rai Chandan Lal,(supra) wherein it has been held that the policy is a contract between the parties and both the parties are bound by terms of contract.
16. Thus, there is no doubt that as per the insurance contract, the Insurance Company had the right to terminate the policy after giving notice in writing to the insured. However, in the present case, as earlier explained, no notice period is mentioned in the concerned clause No.5. For a group insurance policy, it seems necessary that all the group members must be informed of the decision of the Insurance Company to terminate policy during the active period of the policy. Clearly, not less than six months would be considered to be a sufficient period for this compliance. The first letter informing the decision of the Insurance Company to terminate the policy in question was issued on 22.03.2002 and therefore, it is felt that if six months period is allowed for such notice, the policy would be deemed to have been terminated w.e.f. 22.09.2002.
17. Coming to the question of delay in filing the revision petition, there is a delay of 69 days as reported by the office. The petitioner himself has admitted that certified copy obtained on 16.01.2014 was misplaced and then time was taken to obtain another certified copy. Then being a public sector company, time was taken for internal consultation and obtaining higher orders. Looking at the merit of the case, we are inclined to accept the reasons for delay given by the petitioner and to condone the delay in the interest of justice. However, this condonation would definitely come with a cost. Accordingly, cost of Rs.50,000/- (Rupees Fifty Thousand Only) is imposed for this condonation of delay. The cost of Rs.50,000/- (Rupees Fifty Thousand Only) will be paid to the complainant.
18. Based on the above discussion, the revision petition is partly allowed and order dated 13.01.2014 of the State Commission and order dated 27.09.2006 of the District Forum are set aside. The petitioner -Insurance Company is directed to honour continuance of the policies in question till 22.09.2002 and all claims arising within this period (even though received afterwards) will be honoured by the Insurance Company as per the provisions of these policies. The petitioner Insurance Company is also directed to pay Rs.50,000/- (Rupees Fifty Thousand Only) as cost for condonation of delay to the complainant within a period of 45 days, failing which, interest at the rate of 9% shall be paid by the petitioner to the complainant from the date of this order till actual payment. So far as the issue of Insurance Claims submission by the complainant arising upto 22.09.2002 is concerned, the complainant may submit these claims within three months from the date of this order, if not already submitted before. The Insurance Company will honour these claims as per the provisions, terms and conditions of the policies and payment shall be made along with interest at the rate of 6% from 01.01.2003 till payment. Settled claims shall not be reopened. It hardly needs re-emphasis that the petitioner Insurance Company shall also remit the unused premium as per the provisions of the policy to the complainant within the same period of 45 days. Parties to bear their own costs.
...................... DR. B.C. GUPTA PRESIDING MEMBER ...................... PREM NARAIN MEMBER