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Showing contexts for: mediclaim in United India Insurance Company Ltd. vs Mohanlal Aggarwal [Alongwith Letters ... on 5 December, 2003Matching Fragments
2. All the matters relate to mediclaim insurance policy and revolve around the question, whether the insurer has absolute right to cancel the contract of mediclaim insurance or to refuse renewal of the mediclaim policy and have been argued together by the learned counsel appearing for all the parties.
Brief Facts and Pleadings :
3. The Letters Patent Appeal No.1028 of 2003, which arises from Special Civil Application No.11844 of 2002, in which a direction was sought for setting aside the action of the insurer (United India Insurance Co. Ltd.) in seeking to exclude certain diseases as per the communication dated 3rd October 2002 addressed by the Divisional Manager of the insurance company to the insured, as illegal, arbitrary, unreasonable and violative of Article 14 of the Constitution. A direction was sought on the insurer to renew the mediclaim policy with effect from 3rd October 2002 and to settle all the claims of medical dues covered by the insurance company as per the terms of the existing insurance policy.
4. In Letters Patent Appeal No.1003 of 2003, which arises from Special Civil Application No.8516 of 2003, the insured sought a direction on the insurer (United India Insurance Company Ltd.) to renew his mediclaim policy challenging its refusal to renew the same. The insured had obtained a mediclaim insurance which was renewed continuously for a period of eight years, lastly for the period from 15-12-2001 to 14-12-2002, as stated in paragraph 3 of the petition. The insured was required to undergo heart surgery and had put up the claim under the policy which was paid. However, thereafter, when the insured requested for renewal of the mediclaim policy for a further period of one year and also sent a cheque of the due amount of premium, the insurer, by letter dated 2nd December 2002, cancelled the policy. The insurer again by letter dated 13th December 2002 took up a stand that renewal of the policy was dependent upon the discretion of the company, and that it did not want to renew the policy. By letter dated 21st February 2003, the insurer informed the insured that, his request was refused and that he should not address further letters to the company which will not be replied.
The decision under appeal :
7. The learned Single Judge, by a common judgement in the matters from which the Letters Patent Appeals arise, held that the action of the insurance company of declining to renew the mediclaim policy on the ground that the insured had suffered sickness when the policy was subsisting, would be wholly unreasonable and arbitrary. It was held that, in a given case, insured may be healthy at the time when the policy is taken for the first time, but thereafter he may suffer a disease for the reasons beyond his control and the treatment of such disease may continue for a period exceeding the expiry of the period of insurance, and in such circumstances, the stand taken by the insurance company to deny the renewal of the policy for such disease can be said to be unjust, unfair and arbitrary. Relying upon the decision of the Supreme Court in Biman Krishna Bose (supra), the learned single Judge held that, in view of the said decision, it cannot be said that, in the matter of mediclaim policy, the Court, while exercising its jurisdiction under Article 226 of the Constitution, cannot direct the insurance company to renew the mediclaim policy if it finds that the action of refusal or denial to renew the policy was arbitrary and unfair. Relying upon the decision of the Supreme Court in L.I.C. of India v. Consumer Education & Research Centre, reported in (1999)5 SCC 487, the learned Single Judge rejected the contention raised on behalf of the insurance companies that they cannot be compelled to renew the policy and to continue with their insurance since the subject falls within the realm of contract. It was further held that the attempt on behalf of the insurance companies to dilute the effect of the judgement of the Apex Court in Biman Krishna Bose (supra) was misconceived, because, the Apex Court had examined the matter and the action of the insurance company of refusing to renew the mediclaim policy on the touch-stone of Article 14 of the Constitution of India. It was held that the distinction sought to be made on behalf of the insurers on the ground that the monopoly of insurance business which was with them was now removed since 1999, was ill-founded. It was held that these instrumentalities of the State were duty bound to act in a just and fair manner as mandated by Article 14 of the Constitution.
37. Our above reasoning, which is in the context of the mediclaim insurance scheme approved by the Central Government, floated by the GIC, and implemented by the government companies, draws its full vigour from the decision of the Hon'ble the Supreme Court in Biman Krishna Bose (supra), in which the Supreme Court, while considering the mediclaim insurance policy, holding that these insurance companies were "State" under Article 12 of the Constitution, in terms, further held in paragraph 5 of the judgement that, the renewed contract was on the same terms and conditions as that of the original policy, and that if a view was taken that the mediclaim policy cannot be renewed with retrospective effect, it would give handle to the insurance company to refuse the renewal of the policy on extraneous considerations thereby deprive the claim of the insured for treatment of diseases which have appeared during the relevant time, and further deprive the insured, for all time to come, to cover those diseases under an insurance policy by virtue of the exclusion clause. It was held that this being the disastrous effect of wrongful refusal of renewal of the insurance policy, the mischief and harm done to the insured must be remedied. The Court held that, once it is found that the act of the insurance company was arbitrary in refusing to renew the policy, the policy is required to be renewed with effect from the date when it fell due for its renewal. Earlier, in paragraph 3 of the judgement, the Court held that, even in an area of contractual relations, the State and its instrumentalities are enjoined with the obligations to act with fairness and in doing so, can take into consideration only the relevant materials. They must not take any irrelevant and extraneous consideration while arriving at a decision. Arbitrariness should not appear in their actions or decisions. The Court agreed with the view taken by the High court that the order of the insurance company refusing to renew the mediclaim policy of the appellant was unfair and arbitrary. It is clear from the judgement that its ratio is directed against all arbitrary or unfair refusals to renew the mediclaim policy. The fact that, in the case before the Supreme Court, the ground for refusal was extraneous, will not reduce the impact of the decision from the level of setting aside any arbitrary and unfair order to merely applying it to a particular instance where refusal is on some extraneous consideration, such as, approaching the Consumer Forum.