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Gujarat High Court
Judgename :D.A.MEHTA, R.K.Abichandani
UNITED INDIA INSURANCE COMPANY LTD. - Appellant
Versus
MOHANLAL AGGARWAL - Respondent
L.P.A. 1028 of 2003
Decided On : 12/05/2003
Insurance – Letters Patent Appeals – Refusal of renewal of the mediclaim insurance policy – High claim experience – Appeals against judgment and order of single Judge passed allowing three petitions from which these appeals arise, while Special Civil Application has been filed for direction on respondents - Insurance Companies not to exclude diseases contracted by petitioner No. 2 during period of mediclaim policy, which was renewed from time to time, and not to load premium, as was sought to be done, and to renew mediclaim policies of petitioner Nos. 2 and 3 – Appellant contended that there was no duty on the part of the Insurance Company to provide mediclaim insurance unlike insurance of motor vehicles which was statutorily required. It was argued that, in view of the stipulation contained in Clause 5. 9 of the policy, the mediclaim policy could be renewed only by mutual consent and such a policy could be cancelled by giving a thirty days notice. There was, therefore, no right to get the policy renewed, vested in the insured. It was contended that the mediclaim policy was not a statutory policy and there was no legal or statutory right in the insured to seek continuance of such policy, nor any statutory obligation on the part of the insurer to issue or to renew such policy – Whether the insurer has absolute right to cancel the contract of mediclaim insurance or to refuse renewal of the mediclaim policy and have been argued together by the learned Counsel appearing for all the parties – Held, On basis of Critical Illness Insurance Policy, by counsel for insurers that, under that policy, disability of insured arising out of serious illness, such as, coronary artery surgery, cancer, renal failure, stroke etc. , the policy is required to be surrendered and cancelled on payment of claim and such policy cannot be required to be renewed. It will be seen from the Revised Underlying Guidelines of the Critical Illness Insurance Policy that it is a benefit policy covering disability of the insured – Policy is meant to cover earning individuals where the insured, the company or business will be affected financially due to the occurrence of disability from the critical illness – No parallel can be drawn from the nature of that policy for urging that renewal of mediclaim policy can be refused at the sweetwill of the insurance company even when the renewal premium is paid in time – In fact guideline No. 4 of the said Underwriting Guidelines, which were relied upon by the learned counsel for the insurers, incorporates a pre-condition that the insured "should be having a mediclaim policy preferably also an LIC policy" – Therefore, a person suffering from such critical illness in order to cover disability is required to have a mediclaim policy which also supports view that contracting of a disease, which is covered, during period of existing policy cannot be a ground for arbitrary refusal of renewal when premium is paid in time by such insured – The insurer may however be entitled to load the premium at the time of renewal if permissible under the existing contract and the relevant law prevalent in relation to charging of premiums in such cases – Appeals dismissed. (Paras 38, 39 and 40)
( 1 ) THESE three Letters Patent Appeals have been directed against the judgment and order of the learned single Judge passed on 8th August, 2003, allowing the three petitions from which these appeals arise, while the Special Civil Application No. 9425 of 2002 has been filed for a direction on the respondents - Insurance Companies not to exclude the diseases contracted by the petitioner No. 2 during the period of mediclaim policy, which was renewed from time to time, and not to load the premium, as was sought to be done, and to renew the mediclaim policies of the petitioner Nos. 2 and 3.
( 2 ) ALL the matters relate to mediclaim insurance policy and revolve around the question, whether the insurer has absolute right to cancel the contract of mediclaim insurance or to refuse renewal of the mediclaim policy and have been argued together by the learned Counsel appearing for all the parties. Brief Facts and Pleadings :
( 3 ) THE Letters Patent Appeal No. 1028 of 2003, which arises from Special civil Application No. 11844 of 2002, in which a direction was sought for setting aside the action of the insurer (United India Insurance Co. Ltd.) in seeking to exclude certain diseases as per the communication dated 3rd October, 2002 addressed by the Divisional Manager of the Insurance Company to the insured, as illegal, arbitrary, unreasonable and violative of Art. 14 of the Constitution. A direction was sought on the insurer to renew the mediclaim policy with effect from 3rd October, 2002 and to settle all the claims of medical dues covered by the Insurance Company as per the terms of the existing insurance policy. 3. 1 In that case, the petitioner had applied for a mediclaim insurance policy for the first time in 1990 for a sum of Rs. 90,000-00. The sum insured under the policy was thereafter revised to Rs. 3 lakhs from 1993-94. The policy was being renewed from time to time on the regular payment of the premium amount by the insured and was lastly renewed on 4th October, 2001. The insured requested for a further renewal by his letter dated 9th September, 2002 forwarding the bankers cheque of the premium amount to the insurer, which was well ahead of the date of 3rd October, 2002 on which the existing policy was to end. A reminder was sent by the insured on 17-9-2002 requesting the insurer to renew the policy, followed by a legal notice dated 27-9-2002. Thereafter, on 30th September, 2002, the insurer addressed a letter to the insured that, due to "high claim experience", the policy will be renewed by loading of 300% premium and the insured was accordingly required to issue a cheque for the revised premium. The insured accordingly deposited the amount of the revised premium by cash on 1-10-2002 being 300% premium for which a receipt was issued by the insurer on 1-10-2002. The regular premium as well as extra premium were thus paid by the insured in time i. e. before the end of the term of the existing policy. However, thereafter, on 3rd October, 2002, the insurer issued a letter on the insured to the effect that the policy could be renewed only subject to the exclusion of five diseases. The major diseases against which the insured was covered were sought to be excluded from the policy. According to the insured, he was 65 years of age and needed coverage of mediclaim the most, because of his chronic renal failure, and the action of the insurer seeking to exclude all major diseases from the coverage was arbitrary and illegal and not befitting a Government of India Company, which was created for the public and social welfare. 3. 2 The insurer contested the petition by filing affidavit-in-reply dated 25th december, 2002 contending that the insured was not entitled to get the mediclaim insurance policy renewed without the exclusionary clause in view of the stipulation in clause No. 5. 9 of the policy, as per which, the policy may be renewed by mutual consent and the company may at any time cancel the same by sending the i
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