Facts Of The Case: Appellant and his wife Smt. Alka Bose took a mediclaim insurance policy from respondent on 14-12-1990. Thereafter appellant’s wife fell ill and was admitted to hospital on 14-8-1991. He paid Rs. 8243 towards the charges of her treatment and appellant lodged a claim for the same with respondent. Despite repeated request for payment they were not honored and she decided to file an application with District Forum, but the complaint was rejected, on further appeal State Commission stuck down the said order and directed the Company to pay the appellant. Further National Consumer Redressal Commission stuck down the demand for payment of money from insurance Co. while the litigation was still going on. In the meanwhile appellant’s policy fell due of renewal therefore he sent a letter along with cheques of Rs. 1796 for renewal of his existing mediclaim policy, on 24-1-1996 and was refused of the same by the company on the bases of his previous conduct.
Under such circumstances he filed a Writ petition under Art. 226 of the Constitution before Calcutta High Court, the claim was allowed but the court directed the appellant to take fresh mediclaim as the renewal of the same cannot be granted with retrospective effect as the period for the renewal had already expired. And for the said order appellant preferred an appeal to the Supreme Court.
Arguments Raised: Where appellant referred to the exclusion clause (According to which the company shall not be liable to make payment under this policy in respect of any expenses whatsoever incurred by any insured person in connection with or in respect of: All diseases/injuries which are pre-existing when the cover incepts for the first time.) in the policy and also that the order of the High Court would result him in a disadvantageous position. Respondent argued that since the appellant has not deposited the premium for subsequent years the policy cannot be renewed with retrospective effect, it’s not disputed that appellant didn’t send the cheques but the same was returned back to him.
Judgment: Insurance Company herein refused to renew the appellant’s policy on the bases of his previous conduct, which is hereby approaching the court due to the refusal by the company to grant the payment to him would be arbitrary use of power. Insurance company under the provisions of the Act has assumed monopoly in business of general insurance in the country and thus acquired the trappings of the State being other authority under Art. 12, of the Constitution. State and its instrumentalities are required to enjoinder with obligations to act with fairness taking consideration of relevant materials. Arbitrariness must not appear in their actions or in decisions.
As far as renewal of the old policy is concerned the SC held that appellant made no default in payment of premium and disease which an insured had contracted during the period when the policy was not renewed, such disease cannot be covered under the fresh insurance policy in view of exclusion clause which provides that pre-existing diseases would not be covered under the fresh insurance policy.
Comments: – This case reflects one of the several ways insurance company adopts to ignore the policy holder’s claim at the time it’s required to pay in accordance to the mediclaim policy held by the policy holder. Here Company arbitrarily rejected the renewal of the policy by sending back the cheque sent by the insured on the grounds of his previous conduct. Heavy penalty must be imposed on such irresponsive acts of the companies which leads to hardship on insured through long litigations he’s posed to, and unfair treatment of the party who has honestly trusted the company and entered into agreement.
