New India Assurance Co. Ltd. vs SHRIKANT KAVADIKAR

THE two appeals arise out of the order dated 27.12.2002 passed in Case No. 217/2002 by the District Consumer Disputes Redressal Forum, Guna (for short the "District Forum") whereby the complaint for deficiency in service in cancelling the Janata Personal Accident Insurance Policy No. 47450602/47/98/10505 for a period of ten years i.e. from 10.8.1998 to 9.8.2008 of the sum insured of Rs. 5,00,000/- w.e.f. 10.6.2002 and refund of proportionate premium amount of Rs. 771/- of which intimation was given vide letter dated 27.5.2002 was allowed holding that on a policy decision, Insurance Company cancelled all such policies, hence, the District Forum, ordered to refund the premium amount of Rs. 1,250/- with interest thereon at the rate of 12% p.a. and Rs. 2,000/- as compensation for mental pain and sufferings along with Rs. 500/- as costs of the proceedings.

THE Insurance Company aggrieved of the order has filed Appeal No. 152/2003 while complainant dissatisfied with the order has filed Appeal No. 250/2003 for enhancement of compensation. After hearing learned Counsel for the parties and on reappraisal of evidence on record, in our opinion the submission of the learned Counsel for the complainant that unilateral cancellation of the policy is illegal, cannot be accepted in view of the Condition No. 5 of the policy. The question was considered by this Commission in Appeal No. 1104/2002, Smt. Amita Sharma v. The Oriental Insurance Co. Ltd. & Anr., decided on 24.5.2003 (M.P.S.C.D.R.C), wherein this Commission observed in paras 2, 3 and 4 thus : "2. After hearing learned Counsel for the parties and on reappraisal of evidence on record, we find that as a policy decision, the Janata Personal Accident Policies, over and above, the insured sum of Rs. 1 lac were decided to be cancelled in terms of condition No. 5 of the policy, which reads thus : ''xxx xxx xxx xxx xxx xxx''

The submission of the learned Counsel for the appellant that the policy unilaterally could not have been cancelled, cannot be accepted as the policy was cancelled, in the exercise of the right conferred under the policy cancellation of the contract of insurance was considered in terms and conditions of the policy by this Commission in Org. Case No. 16/1995 decided on 2.7.2001 insurance was considered in terms and conditions of the policy by this Commission in Org. Case No. 16/1995 decided on 2.7.2001, The Simran Farms Ltd. v. The United India Insurance Co. Ltd. & Ors., wherein this Commission after referring the right of cancellation of the policy in the manner provided therein, has held that the Insurance Company was entitled to cancel the policy whereby no deficiency could be alleged. The decision of this Commission was affirmed by the National Commission in First Appeal No. 213 of 2001, decided on 10th October, 2002, The Simran Farms Ltd. v. The United India Insurance Co. Ltd. & Ors.

In such circumstances, the unilateral cancellation of the policy cannot be said to be illegal. However, the Insurance Company has not returned the proportionate premium which shall be returned to the appellant with interest thereon at the rate of 12% p.a. from the date of cancellation of the policy till its payment along with Rs. 500/- as costs of the proceedings throughout within a period of two months from the date of receipt of certified copy of this order."

In view of the above, the order of refund of full premium and payment of compensation cannot be sustained, however, if the proportionate premium has not been paid, that shall be paid to the complainant with interest thereon at the rate of 12% p.a. from the date of cancellation i.e. 10.6.2002 along with Rs. 500/- as costs of the proceedings.

IN the result, the Appeal No. 152/2003 filed by the INsurance Company is partly allowed while the Appeal No. 250/2003 filed by the complainant is dismissed. The order of the District Forum shall stand modified as indicated hereinabove. IN the circumstances, parties to bear their own costs of these appeals. A copy of this order be conveyed to the parties and a copy be sent to the District Forum along with the record of the case. Ordered accordingly.