2021 Supreme(SC) 783

SUPREME COURT OF INDIA
(From the National Consumers Disputes Redressal Commission, New Delhi)
S. RAVINDRA BHAT, K.M. JOSEPH, JJ.
Jacob Punnen and Another – Appellants
Versus
United India Insurance Co. Ltd. – Respondent
Civil Appeal No. 6778 of 2013
Decided On : 09-12-2021

IMPORTANT POINTS
(1) General rule of acceptance of an insurance proposal by assured involves unconditional acceptance of all terms – Cap on coverage placed by Insurer without prior intimation to assured and without providing an opportunity to assured to seek alternate insurance policies that were more favourable to their needs was restrictive, and thus not enforceable.
(2) A renewed contract of insurance may provide terms which are different from terms of original contract of insurance – Claim under Consumer Protection Act must be allowed on the ground that there has been a deficiency on part of Insurer.

Headnote:

Per S. Ravindra Bhat, J.

(A) Insurance Act, 1938 – Section 45 – Contract Act, 1872 – Section 22 – Insurance – Mediclaim Policy – Partial payment of expenses incurred on Angioplasty – There can be said to be no consensus ad idem on introduction of cap on coverage by Insurer, as appellants were not informed that they had paid premium for a new policy, but were led to believe that they had in fact renewed a pre-existing policy on same terms, with only difference being removal of their son as a beneficiary and a higher coverage (from Rupees 6 lakhs to Rupees 8 lakhs in total) for appellants, which was accepted by Insurer – General rule of acceptance of an insurance proposal by assured involves unconditional acceptance of all terms – Cap on coverage placed by Insurer without prior intimation to assured and without providing an opportunity to assured to seek alternate insurance policies that were more favourable to their needs was restrictive, and thus not enforceable – If renewed contract is agreed, in all respects, by both parties, fresh terms (with restrictions) would be binding – However, that would not be case when a new term is introduced unilaterally about which policy holder is in dark – Allusion to continuation of terms of Gold policy in respect of senior citizens (who were not to be compelled to migrate to another policy) but were to be subject to same terms, upon payment of a different rate of premia, reinforces conclusion that there was in fact, a renewal of existing terms – Unless unilateral mistake about terms of a contract is so serious as to adversely undermine entire bargain, it does not result in automatic avoidance of a contract – Insurer had caused a renewal reminder, which was acted upon and renewal cheque, issued by appellant – At that stage, or just before renewal premium was furnished Insurer, or its agent was under a duty to alert appellants that change in terms, was likely to impact their decision, and if so required, offer a better or fuller coverage. (Paras 18, 19, 22 and 26)

(B) Consumer Protection Act, 2019 – Section 67 – Insurance Act, 1938 – Section 45 – Guidelines on Standardization of General Terms and Clauses in Health Insurance Policy Contracts’ dated 11.06.2020 – Clauses 10 and 14 – Insurance – Mediclaim Policy – Partial payment of expenses incurred on Angioplasty – Relief declined by Fora below – As Principal Insurer is liable for acts of its Agent – In order to demonstrate deficiency, it is not necessary that same emanates only from a law or a contract – Principle of uberrima fides involves prior intimation of change in terms in insurance contracts – Deficiency of service assumes even more significance in present case, as it pertains to senior citizens – Mediclaim holders were kept in dark, and asked to renew a policy terms of which had undergone a significant change in that its cover was radically different, and imposed limitations on insurer’s liability – Worldwide, nations are seeking viable answers to question of how to offer health care to their citizens – Without an overall viable framework of public health, State cannot achieve this obligation, in a meaningful manner – Findings of State Commission and NCDRC cannot be sustained – Insurer was clearly under a duty to inform appellant policy holders about limitations which it was imposing in policy renewed for 2008-2009 – Its failure to inform policy holders resulted in deficiency of service – Impugned order of NCDRC as well as order of State Commission set aside – Order of District Forum accordingly restored – Respondent shall bear additional costs, quantified at ? 50,000/-. (Paras 33, 34, 35, 36, 37, 39 and 40)

Per K.M. Joseph, J. (Assenting View)

Consumer Protection Act, 2019 – Section 67 – Insurance Act, 1938 – Section 45 – Insurance – Mediclaim Policy – Partial payment of expenses incurred on Angioplasty – Renewal of contract would ordinarily, involve expectation of replication of terms of original contract and actual continuation of terms – However, actual contract may provide otherwise – Terms of renewed contract of insurance may be located in actual contract of insurance – A renewed contract of insurance may provide terms which are different from terms of original contract of insurance – However, claim under Consumer Protection Act must be allowed on the ground that there has been a deficiency on part of Insurer – Insurer brought about a change in policy – This change introduced a cumbersome limitation – It kept Insured in dark about limitation at the time when renewal notice was issued and premium was accepted – Insurer had duty to inform appellants that a change regarding limitation on its liability was being introduced – This duty to take insured into confidence was breached – This was deficiency in service – There was unjustifiable non-disclosure by Insurer about introduction of clause of limitation – It constituted deficiency in service and resultantly appellants are entitled to relief. (Paras 5 and 6)

Facts of the case:

Appellants challenge the order of the National Consumer Disputes Redressal Commission which upheld the concurrent rejection of their application seeking relief.

Findings of Court:

Even proceeding on the basis that the policy incorporates terms of the contract, insofar as the respondent insurer unilaterally purported to incorporate a clearly cumbersome limitation involving a breach of duty to take the appellants into confidence, court would not be powerless to undo the wrong.

Result : Appeal allowed with costs.