Unfair and unreasonable exclusion clauses in contracts, especially in cases of inequality of bargaining power, may be considered void.

M.M. Kumar, J

1. The instant appeal filed under Clause 10 of the Letters Patent challenges judgment dated 4.5.2011 rendered by the learned Single Judge dismissing the writ petition of the petitioner appellant M/s IFFCO TOKIO General Insurance Company Ltd. (for brevity, ‘the Insurance Company’).

2. Brief facts of the case are that Shri Naresh Aggarwal respondent No. 2 had taken an individual mediclaim policy for himself and his wife from the Insurance Company, which was valid from 6.6.2007 to 5.6.2008 (P2). In the terms and conditions of the policy there was a specific exclusion clause No. 1 under the heading ‘What is not covered’, which reads as under :

“What is not covered :

All Diseases/injuries which are in preexisting condition when the cover incepts with us for the first time. However, this exclusion shall cease to apply for such Preexisting Condition if You/Insured Person have maintained an Individual Medishield Insurance Policy with us for a consecutive 3years period prior to the present policy coverage and no claim, care, treatment or advice has been recommended by or received from a Medical Practitioner in relation to such PreExisting Condition during that 3year period.”

3. The said policy was renewed from 6.6.2008 to 5.6.2009 and again from 6.6.2009 to 5.6.2010. Respondent No. 2 was hospitalised from 10.3.2010 to 12.3.2010 for treatment of ‘Coronary Artery Disease’ in Medicity, Sector 38, Gurgaon. He approached the Insurance Company through third party administrator under the policy i.e. M/s Paramount Healthrespondent No. 3 with the request to provide cashless facility for treatment. On 11.3.2010, respondent No. 3 declined the request of Shri Naresh Aggarwalrespondent No. 2 on the ground that he was seeking treatment for the heart disease which he had been suffering for the last eight years. It was found to be a case of preexisting disease covered under aforementioned exclusion clause of the policy (P6). Respondent No. 2 thereafter raised a claim for reimbursement of medical expenses incurred by him on his treatment (P7). On 16.4.2010, his claim for payment was denied on the ground that his was a known case of coronary artery disease since 2002 (P11). It is stated that the treatment of disease taken by respondent No. 2 in the year 2010 was not covered under the medishield policy as he was suffering from this disease prior to taking the policy. Feeling aggrieved, respondent No. 2 approached the Permanent Lok Adalat (Public Utility Services) Gurgaon (for brevity, ‘the Lok Adalat’) by filing an application under Section 22C of the Legal Services Authority Act, 1987, claiming a sum of `2,33,000with interest @ 24% per annum from the date of claim application till payment with costs (P17). On 8.12.2010, the Lok Adalat passed an order directing the petitionerappellant to pay to respondent No. 2 a sum of ` 2,20,000/along with interest @ 9% per annum from the date of institution of the claim till payment (P1).

4. The only submission made before the learned Single Judge was that the claim has been declined in accordance with the terms and conditions of the policy and such a claim would not be admissible. However, the learned Single Judge rejected the defence pleaded by the Insurance Company and dismissed the writ petition by observing as under :

“Sole submission before this Court is that claim has been declined in terms of the conditions of the policy and such a claim would not be admissible. This defence to me would sound highly unfair. Why would one take a policy of mediclaim if he is not to get his claim for genuine treatment taken? It is for the Insurance Company to see and not to issue a policy where they find that such person is not entitled to claim on account of treatment of the existing disease. The petitioner (respondent No. 2?) had been paying the premium for the last three years. He may be suffering from this disease since 2002 but need to seek treatment arose only in 2010. One would not take mediclaim poli