2008 Supreme(SC) 917

2008(7) Supreme 591
SUPREME COURT OF INDIA
S.B. Sinha and V.S. Sirpurkar, JJ.
United India Insurance Company Limited — Appellant
versus
Manubhai Dharmasinhbhai Gajera & Ors. — Respondents
Civil Appeal Nos. 4113-4115 of 2008
(Arising out of SLP (C) No. 9876-9878 of 2004)
Decided on : 16-05-08

IMPORTANT POINT
Renewal of a medi-claim policy subject to just exceptions should ordinarily be made. But the same does not mean that the renewal is automatic.

Headnote:Insurance Act, 1938 – Mediclaim policy – Renewal of on payment of the amount of premium – Whether would be automatic – Held action on part of authorities of appellant was highly arbitrary – Respondents though were not entitled to automatic renewal, but indisputably, they were entitled to be treated fairly – When a policy is cancelled, the conditions precedents therefor must be fulfilled – Some reasons therefor must be assigned-When an exclusion clause is resorted to the terms thereof must be given effect to – What was necessary is a pre-existing disease when the cover was inspected for the first time- Only because the insured had started suffering from a disease, the same would not mean that the said disease shall be excluded – If the insured had made some claim in each year, insurance company should not refuse to renew insurance policies only for that reason – The words ‘incepts for the first time’ as contained in clause 4.1 as also the words ‘continuous and without break’ if renewal premium is paid in time, must be kept in mind as also reasons for cancellation as contained in clause 7(1)(n) thereof – Renewal of a medi-claim policy subject to just exceptions should ordinarily be made – But the same does not mean that the renewal is automatic-Keeping in view the terms and conditions of the prospectus and the insurance policy, parties are not required to go into all formalities – The very fact that the policy contemplates terms for renewal, subject of course to payment of requisite premium, the same cannot be placed at par with a case of first contract – Having regard to fact situation obtaining in each case, no case made out for exercise of discretionary jurisdiction under Article 136 of Constitution of India – Keeping in view the role played by insurance companies, held essential that Regulatory Authority must lay down clear guidelines by way of regulations or otherwise – No doubt, the regulations would be applicable to all the players in the field – The duties and functions of the Regulatory Authority, however, are to see that service provider must render their services keeping in view nature thereof – Held appropriate if the Central Government or the General Insurance Companies also issued requisite circulars – Appellants being subsidiaries to General Insurance Corporation could not ignore statutory provisions – They were bound by directions issued by Central Government – Appeals dismissed. (Paras 64 to 68)

       Facts of the Case :

        Issue in consideration in present case was whether renewal of a mediclaim policy on payment of the amount of premium would be automatic.

       Findings of the Court :

        Held renewal of a medi-claim policy subject to just exceptions should ordinarily be made. But the same does not mean that the renewal is automatic. Keeping in view the terms and conditions of the prospectus and the insurance policy, parties are not required to go into all formalities. The very fact that the policy contemplates terms for renewal, subject of course to payment of requisite premium, the same cannot be placed at par with a case of first contract. Having regard to fact situation obtaining in each case, no case made out for exercise of discretionary jurisdiction under Article 136 of Constitution of India. Keeping in view the role played by insurance companies, held essential that Regulatory Authority must lay down clear guidelines by way of regulations or otherwise. No doubt, the regulations would be applicable to all the players in the field. The duties and functions of the Regulatory Authority, however, are to see that service provider must render their services keeping in view nature thereof. Held appropriate if the Central Government or the General Insurance Companies also issued requisite circulars. Appellants being subsidiaries to General Insurance Corporation could not ignore statutory provisions. They were bound by directions issued by Central Government.

       Result : Appeals dismissed.