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11. The learned counsel appearing for the insured persons led by the learned counsel for the petitioners in Special Civil Application No. 9425 of 2002 have contended that the mediclaim insurance policy was a beneficial policy and if the insurance premium is paid in time, as per the standing offer contained in Clause 11 of the prospectus at Anenxure "J" to that petition, and on the basis of the implied terms of the policy itself, the policy was required to be renewed and cover extended. It was submitted that the provisions regarding renewal on payment of premium in time which were implied in the stipulations of the policy in light of the offer to renew contained in Clause 11 of the prospectus, would not get nullified by the provisions regarding renewal by mutual consent and termination contained in Clause 14 of the prospectus and Clause 5.9 of the insurance policy. The learned counsel relied upon the circular-letter dated 18-12-1998, at Anenxure "I" to the petition, pointing out that disease occurring during the period of the existing policy cannot be excluded at the time of renewal even as per the understanding of the Insurers. It was also submitted that it is only when the sum insured was to be enhanced at the time of renewal that the question of mutual consent would arise, because, a disease that has occurred during the existence of the policy can be excluded from the renewed policy only to the extent of the enhancement of the sum insured and so far as the basic sum insured is concerned, no such exclusion is warranted and renewal could not have been refused on the ground that the disease was contracted during the existence of the policy. It was submitted that the insurance companies were `State' within the meaning of Article 12 of the Constitution and could not arbitrarily or unreasonably refuse renewal of the mediclaim policy or terminate the same, despite there being a clause requiring mutual consent for renewal in the policy. The learned counsel for the insured in all these matters supported the reasoning of the learned Single Judge for their argument that the policies ought to have been renewed on payment of the renewal premium in time, and that diseases could not have been excluded, as was sought to be done by the insurers at the time of renewing the policy.

33. If the insurance company provides continuity of cover under the mediclaim policy on payment of renewal premium in time and simultaneously in the cancellation clause provides that renewal will be by mutual consent, then on a harmonious construction of the two seemingly opposite provisions, the mutual consent provision will apply only to such renewals which are not consequential upon the timely payment of premium that would entail continuity of the cover. This can be illustrated by reference to the cases where the insured may want to continue their cover, but with enhancement of the sum insured. In such cases, the question of consenting to renew the cover for the extent of enhancement of the sum insured would arise and it is in the context of such enhanced sum that the company may become justified to consider exclusion of the disease so far the enhanced sum is considered though it would be liable to continue the cover for the basic sum insured, if the renewal premium was paid in time, without seeking such enhancement. If, however, a conflict is to be read between these two provisions, namely, Clause 11 of the Standard Prospectus and Clause 5.9 of the policy, same as Clause 14 of the Prospectus, the policy will have to be construed strongly against the insurer by giving due weight to the standing offer to renew contained in the Clause 11 of the prospectus which gives proper meaning to various clauses of the policy, entitling continuance of cover on payment of renewal premium by the insured in time.

(4) If a person is insured with another subsidiary and wishes to renew with us, the same should be considered only after ascertaining the claim status and exclusion under the previous policy.

In case the claim status revealed is adverse or there is a continuing illness or an impending illness, such cases should be advised to continue with the same subsidiary and should not be accepted."

34.1 The circular-letter dated 18th December 1998 based on the GIC's letter of 13th June 1998 also provided norms in respect of enhancement of sum insured. One such norm is that enhancement should be allowed only at the time of renewal. Requests for enhancement of sum insured in case of persons below 60 years were to be acceded to, based on a declaration that the insured has not contracted any illness or disease if the amount of enhancement did not exceed Rs.50,000=00. In case of persons above 60 years, necessary test reports and other formalities were required. Paragraph 5(c) of the circular letter, inter alia, provided that the disease for which claim has been lodged under the previous policy and of which the insured is not completely recovered, should also be specifically excluded "so far as enhancement of sum insured is concerned".

34.2 It, therefore, clearly follows that the diseases contracted during the period of existing policy cannot be excluded on renewal of the cover so far as the basic sum insured is concerned, when the renewal premium is paid in time. However, in cases where there is a request made at the time of renewal by the insured for enhancement of sum insured, the insured cannot, by simply paying renewal premium in time in response to the standing offer contained in the stipulation incorporated in clause 11 of the prospectus, claim cover for the enhanced amount since earlier, in respect of the amount of enhancement, there was no contract between the parties. This is why mutual consent would be required for renewal in cases where there is a request for enhancement of the sum insured made by the insured at the time of renewal. Thus, there can be cases of renewal, which do not fall under the stipulation giving option to the insured to renew under the mediclaim insurance scheme by paying renewal premium in time, in which renewal could be done only under the mutual consent clause 5.9. Even in cases where there is a stipulation as to renewal at the option of the insured, as is contained in the present mediclaim insurance scheme, the insurer's rights in relation to misrepresentation or non-disclosure are governed by the state of affairs that existed at the inception of the contract and renewal can be refused, if there are detected vitiating elements in the original contract, such as, misrepresentation, fraud or non-disclosure of material facts. Despite the grounds, which would enable the insurer to repudiate the contract being detected, the insurer may waive them and, by mutual consent, renew the policy. Thus, renewal at the option of the insured by accepting the standing offer for renewal stipulated under the scheme by payment of renewal premium in time and the renewal by mutual consent under clause 5.9 of the policy, would ordinarily operate in different fields and the option to renew the mediclaim policy given to the insured cannot be rendered meaningless by subjecting it to the consent of the insurer, except on the grounds vitiating the contract when the cover first incepts.