RACHANA GUPTA vs BRANCH MANAGER, ORIENTAL INSURANCE CO. LTD.

THIS is a complaint under Section 12 read with Section 17 of the Consumer Protection Act, 1986. The prayer of the complainant is that the cancellation of long term Janta Accident Policy (hereinafter called the ''Accident Policy'' for short) issued by opposite party No. 1 in favour of the complainant be set aside and it be directed that the said policy stands revived. It was also prayed that the opposite parties be directed to pay the complainant compensation of Rs. 25,000/- as well as cost of the complaint.

UNDISPUTABLY, the complainant obtained an accident policy issued by the opposite party Nos. 1 and 2 through their agent opposite party No. 3. One premium of Rs. 3,500/- was paid by the complainant. The accident policy covered the risk for the period from 30.4.1998 to 29.4.2008 i.e., for 10 years. Assured amount of Rs. 10 lacs was payable in the event of death of insured, under the terms and conditions enumerated in the policy. It is also not in dispute that by their letter dated 30.1.2002, the opposite party Nos. 1 and 2 cancelled the said policy w.e.f. 7.2.2002. Proportionate amount of premium for the unexpired period of policy amounting to Rs. 1,556/- was also refunded by the opposite party Nos. 1 and 2 to the complaint. It has been averred in the complaint that a cancellation notice dated 30.1.2002 was received by the complainant. It was further averred that it was mentioned in the said cancellation notice that as per Clause 10 of the terms of the policy, the cancellation of the accident policy could be effected by giving 7 days prior notice, and that the accident policy issued in favour of the complainant a was being cancelled, as per the said clause. It was averred by the complainant that it was not clear as to on what basis, the policy could be cancelled. It was further averred by the complainant that the policy could not be cancelled after its issuance. It was averred that the notice of cancellation was received after the date of cancellation i.e., 7.2.2002 as mentioned in the notice. It was averred that the said notice was not in due compliance of the conditions as laid down in Clause 10 of the said policy, which required 7 days prior notice. It was averred by the complainant that the said letter of cancellation dated 30.1.2002 had the effect of cancelling the policy, as cheque for the refund of the pro rata premium was also sent along with said notice. It was, therefore, prayed by the complainant that the cancellation of the said policy be set aside, and the policy be treated as having revived and that compensation and costs be also awarded to the complainant.

The complaint is resisted by the opposite party Nos. 1 and 2. It was averred in the written version of opposite party Nos. 1 and 2 that the policy has been cancelled as per Clause 5 of the terms of the policy and the balance amount of the premium was refunded after deducting proportionate premium for the period during which the policy was in effect in pursuance of the stipulation as above in the policy. It was averred that by mistake it was mentioned in the cancellation notice dated 30.1.2002, that the policy was being cancelled as per Clause 10 of the said policy, while in fact it was cancelled under Clause 5 of the policy. It was also averred that as per Clause 5 of the policy, it could be cancelled at any time by notice in writing and that 7 days notice was not required as has been wrongly mentioned in the letter dated 30.1.2002 and cancelling the policy. It was further averred that the opposite party Nos. 1 and 2 exercised their right under Clause 5 of the policy to cancel it. It was, therefore, averred that there was no justification for the grievance of the complainant and it was, therefore, prayed that the complaint be dismissed.

THE learned Counsel for the complainant submitted that the policy was issued by the opposite party Nos. 1 and 2 for the period from 30.4.1998 to 29.4.2008. It was further submitted that the intimation dated 30.1.2002 regarding the cancellation of policy was sent to the complainant along with refund voucher. It was further contended that though in the intimation notice dated 30.1.2002, it was stated that policy is being cancelled as per Clause 10 of the policy condition, but in the written version, the opposite parties have mentioned the policy was in fact cancelled as per Clause 5 of conditions of the policy. It was further submitted that the opposite party Nos. 1 and 2 could not cancel the policy which was issued in public interest and that the same could be cancelled only as per the provisions of the Indian Contract Act. It was submitted that the opposite party Nos. 1 and 2 should not be permitted to cancel the policy. It was, therefore, submitted that the cancellation be set aside and policy be treated as revived. Learned Counsel for the opposite party Nos. 1 and 2, however submitted that the insurer has taken a policy decision to cancel all the accident policies. Accordingly an intimation to all the insured as also to the complainant was given by their letter dated 30.1.2002. Proportionate amount of premium for the remaining period of the policy was also refunded. It was submited that as per Clause 5 of the accident policy the opposite party Nos. 1 and 2 have a right to cancel the policy, at any time by sending a notice in writing to the insured and by refunding the proportionate amount of the premium. That having been done by the opposite party Nos. 1 and 2, the policies stood cancelled and the complainant was not entitled to claim any relief.

OPPOSITE party Nos. 1 and 2 have filed the terms and conditions of the policy. As per Clause 5 of the said terms and conditions, the Insurance Company had reserved the right to cancel the policy by giving notice in writing. The said Clause 5 further stipulates that the proportionate amount of premium for the unexpired period of policy shall be refunded. Undisputably, intimation dated 30.1.2002 cancelling the policy was sent by the Insurance Company and the same was duly received by the complainant/insured. It is also not in dispute that the balance amount of premium was also received by the complainant along with the said letter. Thus, it would appear that policy was duly cancelled as per Clause 5 of the terms and conditions of the policy. Though, it is true that in the intimation letter dated 30.1.2002 cancellation of the policy has been stated to have been made as per Clause 10 of the policy. However, in the written version opposite party Nos. 1 and 2 have averred that mention of Clause 10 in the letter was on account of typing mistake and cancellation was, in fact, effected in terms of Clause 5 of the terms and conditions of the policy. It may be noticed that the original policy document has not been produced by the complainant and only a copy of the schedule of policy has been produced by him. It also appears that in Clause 5 of the terms and conditions of the policy, produced by the complainant, no notice period was mentioned. However, notice dated 30.1.2002 sent to the complainant, it has been mentioned that 7 days notice is being given. Even assuming that notice of 7 days was required as mentioned in the said letter, yet, it is clear that much longer time than a week has elapsed, since receipt of the said notice dated 30.1.2002 by the complainant. Hence notice period is now long over. Therefore, no grievance in that regard can possibly be raised in this complaint. It may be noticed that the Madhya Pradesh Commission in its decision in New India Assurance Co. Ltd. v. Murarilal Sharma, 2004 (1) CPR 306, has dealt with similar aspect of cancellation of policy by the insurer. In that case, the grievance and contention raised on behalf of the complainant that the insurer could not unilaterally cancel the policy, which also had a claim similar to Clause No. 5 of the policy under consideration in the instant case, was repelled, and it was held that the Insurance Company was entitled to cancel the policy and that it did not commit any deficiency in service in doing so. We are also of the opinion that the opposite party insurers were entitled to exercise their right to cancel the policy and have done so by sending letter dated 30.1.2002 to the complainant.

THE last submission of the learned Counsel for the complainant also was that the opposite party Nos. 1 and 2, the Insurance Company, should not be permitted to cancel the accident policy which was floated by it in public interest. It was submitted that it would not be just and proper to permit the Insurance Company to do so as it would be against public interest. However, as is noticed earlier, the policy condition permitted and conferred a right on the Insurance Company to cancel the policy at any time. In view of above, this Commission or Consumer Forum cannot go into the question of harshness or the adverse impact of cancellation of policy. We are of the opinion that this Commission will have to confine itself to the consideration of due complaint of terms and conditions of the policy. Once, it is satisfied that the cancellation was in accordance with the terms and conditions of policy, then it has to uphold the action of the insurer. We are clearly of the opinion that we cannot consider the harshness or propriety of the terms and conditions in the exercise of our jurisdiction.

THE National Commission in Simran Farms v. United India Insurance Co. Ltd., III (2002) CPJ 359 (NC), while dealing with similar contention raised on behalf of the complainant that the cancellation of insurance policy was arbitrary and was in violation of principles of natural justice, expressed its inability to accept such submission. It was observed that the Consumer Forum cannot go into the question harshness of the clause in the agreement between the parties. In view of above, contention of learned Counsel for the complainant, cannot be accepted. In view of the above, it is clear that the policy issued to the complainant was duly cancelled by the opposite party Nos. 1 and 2 by giving in writing notice dated 30.1.2002. No grievance in that regard can be raised by the complainant as the cancellation was as per terms of the policy. The complainant is, therefore, not entitled to any relief. The complaint is accordingly dismissed. However, in the facts and circumstances of the case, parties are left to bear their own costs. Complaint dismissed.