Munish Mishra vs ORIENTAL INSURANCE CO LTD

BY the order impugned the Forum below has dismissed complaint of appellant seeking direction to respondent -the Oriental Insurance Company Ltd. to renew his Mediclaim Policy for the year 2002 -2003.

AS admitted by parties, the appellant had Mediclaim Policy from respondent -insurer for himself and for his family members including his wife for last 10 years. The last policy obtained by him was for the period from 9.8.2002 to 8.8.2003. During this period his wife suffered with cancer and his claim for reimbursement of medical expenses was also paid by the respondent -insurer. However, his prayer for renewal of the policy for the subsequent year 2003 -2004 was refused by the respondents and a cheque dated 4.8.2003 for Rs. 7553/ - remitted by appellant by post on 7.8.2003 to the respondent -Company was also returned by the latter. Although in its letter dated 11.8.2003 addressed to the appellant, the respondent -Company assigned no reason for not renewing the policy, but it was obvious that the renewal was refused as the appellant -complainant has already claimed the benefit under the policy in the preceding year and the ailment with which his wife suffered, was likely to continue for long and the expenditure could also be high. The moot question requiring determination is whether the respondent a Government owned Insurance Company having all the trappings of the ''State'' could in the facts and circumstances of the case, refuse renewal of the policy?

IT is contended by Mr. Ravindra Tiwari, learned Counsel for the respondent -Company that it was a matter of contractual relationship and it was open for the respondent -Company to accept or refuse the proposal of the appellant. The question whether or not the refusal was justified, was wholly irrelevant. He placed reliance on a decision of this Commission rendered in Appeal No. 785/2003 Pramod Kumar Jain v. The Oriental Insurance Company Ltd., decided on 9.3.2004. As against it Mr. Atmaram Tank, learned Counsel for appellant vehemently contended that the respondent -Company having acquired status of the ''State'' as envisaged under Article 12 of the Constitution, could not have acted in an unreasonable manner and refuse renewal merely because the appellant -insured had in the previous year obtained claim under the policy. We feel persuaded by the arguments of Mr. Tank. In fact, it is a case where the appellant and his family members have been paying premium for about 10 years. It was during previous year that the wife of the appellant was diagnosed suffering from cancer the treatment of which is likely to continue for long and expenditure could also be high. But if the Insurance Company at this juncture refuse to renew the policy, the appellant will be left in the lurch. Needless to say that if he goes to a new Insurance Company, his proposal is likely to be turned down or atleast the disease of his wife will be excluded from the insurance cover on the ground of it being pre -existing one. The very purpose of seeking insurance will be defeated. Surely the Insurance Companies are not expected to insure people under the belief that the insured is not likely to suffer any disease or else they would be free to refuse further insurance cover. If the Insurance Companies are allowed to refuse renewal in such cases, it would defeat the very object with which the General Insurance Business (Nationalisation) Act, 1972 was enacted and the whole concept of insurance will lose its meaning.

THE legal position in the matter is made luculent by Honble the Supreme Court in the case of Biman Krishna Bose v. United India Insurance Co. Ltd., III (2001) CPJ 10 (SC) and it was held: ''In the present case, what we find is that the respondent -Insurance Company refused to renew the insurance policy of the appellant on the ground of his past conduct. The past conduct attributed is that the appellant had gone in litigation for payment of his claim lodged by him with the respondent Insurance Company. If an insured lodges a claim with the company and the company does not honour the claim, the insured is left with no alternative but to knock the doors of Court of law. Merely because the appellant had approached the Consumer Forum and this Court for redressal of his grievance, can such an act be attributed as bad record as to disentitle the appellant to get his policy renewed. The answer is no. Where an Insurance Company under the provisions of the Act having assumed monopoly in the business of general insurance in the country and thus acquired the trappings of the State being other authorities under Article 12 of the Constitution, it required to satisfy the requirement of reasonableness and fairness while dealing with the customers. 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 to a decision. Arbitrariness should not appear in their actions or decisions. In the present case, what we find is that arbitrariness is writ large in the actions of the respondent company when it refused to renew the Mediclaim Policy of the insured on the ground of his past conduct i.e., having gone into litigation for payment of his claim against the respondent company. We are, therefore, in agreement with the view taken by the High Court that the order of the respondent company refusing to renew the Mediclaim Policy of the appellant was unfair and arbitrary.''

It will be thus seen that in the instant case also the respondent -Insurance Company was wrong in refusing renewal of the policy merely because the wife of appellant had obtained reimbursement of her treatment expenses in the preceding year. Our decision in the case of Pramod (supra), we may concede frankly, does not lay down correct law being contrary to the legal position as settled by the Supreme Court in the case of Biman Krishna (supra).

THE question now arises whether the appellants policy can be ordered to be renewed with effect from the date when it fell due for renewal? Again the answer, we say with respect, is found in Biman Krishna (supra), wherein it is held: ''that once it is found that the act of an 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.''

IT may be noted here that the appellant had remitted the amount of premium through an account payee cheque well in time. The respondent -Insurance Company is, therefore, obliged to renew the policy with effect from the date when it fell due for its renewal. The appellant has also claimed compensation of Rs. 20,000/ -. Having regard to the facts and features of the case, we are of the considered opinion that direction for renewal of the policy with effect from the due date and awardment of cost of Rs. 2500/ - will meet the ends of justice.

WE accordingly allow the appeal, set aside the impugned order and direct that if the appellant applies for renewal of his Mediclaim Policy for the expired period and pays the requisite premium the respondent -company shall renew the said Mediclaim Policy forthwith and with effect from the date when it fell due for its renewal. The respondent shall also pay Rs. 2500/ - to appellant towards cost of this litigation. Appeal allowed.