AI Structured Summary
Not yet generated for this judgment
Judgment
S. Muralidhar, J.—The prayer in this writ petition is for a mandamus to be issued to Respondent No. 1 New India Assurance Company Ltd. (''NIACL'') to reimburse the expenses incurred by the Petitioner towards the treatment of cancer (intravenous chemotherapy) in terms of the mediclaim policy taken by the Petitioner. The second prayer is for a direction to Respondent No. 1 to implement the Awards dated 18th March 2004 and 26th April 2005 of the Insurance Ombudsman by accepting the requisite premium for the period 30th July 2003 to 14th April 2004 on pro rata basis from the Petitioner and process the claim in respect of the medical expenses incurred by him during that period, and pay him the admissible claim amounts.
The facts leading to the filing of this petition are that on 30th July 1999 the Petitioner took a mediclaim policy from National Insurance Company Ltd. (''NICL''). This policy was regularly renewed till 29th July 2002. Thereafter, the Petitioner switched over to Respondent No. 1. The policy was to expire on 28th July 2003 and on 10th July 2003 the Petitioner deposited a cheque of Rs. 10,129/- with Respondent No. 1 for renewal of his mediclaim policy. It may be mentioned that by that time, the Petitioner had lodged the following claims which were all paid by Respondent No. 1:
Sl. No.
Treatment Period
Amount
Status
(A)
20.1.2003 to 26.2.2006
41283/-
Paid
(B)
18.3.2003 to 10.4.2003
36654/-
Paid
(C)
18.4.2003 to 12.6.2003
9663/-
Paid
(D)
15.6.2003 to 8.7.2003
3961/-
Paid
(E)
18.7.2003 to 27.7.2003
1915/-
Paid
The Petitioner states that no reply was received as regards his request for renewal. It was disclosed to the Petitioner that renewal could be only after excluding the clause for cancer treatment. It was also conveyed that the policy was only for one year and it was in the discretion of Respondent No. 1 whether to renew the policy or not. A further application made by the Petitioner on 30th July 2003 enclosing the renewal premium, was returned by Respondent No. 1.
Consequently, on 30th July 2003 and 8th August 2003 the Petitioner filed his claims before the Insurance Ombudsman (Delhi and Rajasthan). On 18th March 2004, the Insurance Ombudsman passed an award ''that the New India Assurance Company Ltd. shall renew the mediclaim policy of the complainant and shall give him all the benefits of continuity as if his policy had been renewed on 30th July 2003 without any break''.
Before the Insurance Ombudsman, Respondent No. 1 was represented by its Branch Manager Shri D.K. Khanna who handed over to the Insurance Ombudsman a letter dated 30th July 2004 signed by its Divisional Manager in which the reasons for not renewing the mediclaim policy of the complainant had been summarized.
The first reason given by Respondent No. 1 was that in the very first year itself the Petitioner had made five claims and, therefore, had taken a policy ''only with a view to making claims.'' This was rejected by the Insurance Ombudsman by pointing out that during the previous years the Petitioner had a policy with the NICL i.e. from 30th July 1999 till 29th July 2002. He had made no claim and in fact had earned a cumulative bonus of 15%. The second reason was that the Petitioner had concealed material facts in his proposal form that he was suffering from hypertension and bronchitis. This was also rejected by the Insurance Ombudsman. It was noticed that in a covering letter dated 8th February 2003, the complainant described his case history and that he had been hypertensive for the last four years. However, there was no concrete evidence to show that there was a firm diagnosis of hypertension prior to 30th July 1999. Further, there was no diagnosis of the Petitioner suffering from bronchitis. Cancer had been diagnosed only during the early part of 2003. The claims were in respect of treatment of cancer which developed only in early part of 2003. There was, therefore, no suppression of any material facts. It was held by the Insurance Ombudsman as under:
What applies to renewal also applies to claims. If the Insurance Company had any concrete evidence to prove that the complainant had suppressed material facts regarding his ailment, then the claims ought not to have been entertained; they ought to have been repudiated. On the contrary, the Insurance Company has admitted that it has paid all the claims of the complainant. If that is so, then there is absolutely no reason why the mediclaim policy of the complainant should not be renewed.
It was in the above circumstances that the Insurance Ombudsman in the Award dated 18th March 2007 concluded as under:
the action of the Insurance Company in the case of the complainant is high-handed and arbitrary and unworthy of a public sector company. A Public Sector Company should have good and sufficient reasons before refusing to renew the Mediclaim policy of a customer. In the present case, the Insurance Company has not valid reason at all for refusing to renew the Mediclaim policy of the complainant.
Consequently, the directions as set out in para 4 above were issued by the Insurance Ombudsman.
It is not in dispute that Respondent No. 1 accepted the above Award dated 18th March 2004 of Insurance Ombudsman. However, the Petitioner''s policy was renewed from 15th April 2004 to 14th April 2005. The Petitioner then wrote to Respondent No. 1 on 24th April 2004 pointing out that this failure to renew the policy from 30th July 2003 onwards may have been because of an inadvertent error and that the necessary endorsement should be made on the renewed policy. He followed this by reminders on 28th April 2004 and 12th May 2004 When there was no response, he was compelled to again approach the Insurance Ombudsman with a letter dated 14th May 2004
The stand of Respondent No. 1 was that the Insurance Ombudsman had ''decided to treat the policy as continuous renewal without break without any exclusions (although there is gap in insurance) for all future claims except all claims incurred during the intervening period 30th July 2003 to 14th April 2004 In other words all expenses incurred during the intervening period are not payable under the policy''.
It is pointed out by the Petitioner that claims made subsequent to 14th April 2004 were honoured by Respondent No. 1 but not the claims made between 30th July 2003 and 14th April 2004 Again, the claim made by the Petitioner on 9th February 2005 was rejected on the ground that ''claims for oral chemotherapy shall not be admissible''.
On 26th April 2005, Office of Insurance Ombudsman wrote to the Respondent No. 1, with a copy to the Petitioner, clarifying as under:
On the basis of my Award dated 18th March 2004, the course of action to be adopted by the Insurance Company now is to collect from the complainant the requisite premium for the period 30th July 2003 to 14th April 2004 on pro rata basis and to process the claims in respect of medical expenses incurred by the complainant during this period and pay him the admissible claim amounts after due scrutiny of bills.
Respondent No. 1 was asked to take action accordingly. Following the above letter, the Petitioner again wrote to Respondent No. 1 enquiring ''how much premium I have to pay for the mediclaim policy for the period 30th July 2003 to 14th April 2004''. This was followed by several letters to which no reply was received. Thereafter the present petition was filed.
During the pendency of this writ petition, the Petitioner expired and his legal representatives were brought on record by an order dated 11th February 2008.
The submissions of Mr. Salil Paul, learned Counsel for Respondent No. 1 have been heard. He submitted first that although Respondent No. 1 had not challenged the Award dated 18th March 2004 or subsequent directions dated 26th April 2005 of the Insurance Ombudsman, Respondent No. 1 had in fact partly implemented the said Award by renewing the mediclaim policy from 15th April 2004 to 14th April 2005. When asked why the policy was not renewed with effect from 30th July 2003 itself, he referred to Section 64VB of the Insurance Act which lays down ''no risk to be assumed unless premium is received in advance''. It is submitted that since Respondent No. 1 had not collected the premium for the period 30th July 2003 to 14th April 2004, it could not entertain the claims arising during this period. Secondly, it is submitted that the Insurance Ombudsman could not entertain claims in respect of non-renewal of mediclaim policy as they do not fall under any of the five categories of complaints that can be entertained by the Insurance Ombudsman under Rule 12(3) of the Redressal of Public Grievance (''RPG'') Rules, 1998. He referred to a clarificatory Circular dated 18th March 2004 issued by the governing body of the General Insurance Council, Mumbai where after noting the above RPG Rules it was directed that Insurance Ombudsman may be advised not to entertain complaints in respect of non-renewal of mediclaim policies by general insurers. He also relied upon the judgment of the Karnataka High Court in B. Krishna Bhat v. Union of India (decision dated 30th July 2002 in W.P. No. 3429 of 2001).
This Court finds that the above stand of Respondent No. 1 is untenable. It is not open for Respondent No. 1, after accepting the Awards dated 18th March 2004 and 26th April 2005 of the Insurance Ombudsman, to choose to implement such Awards only in part. No objections to the Awards of the Insurance Ombudsman by Respondent No. 1 can be permitted at this stage. In fact, it is not open to the insurance companies to challenge such Award to the Insurance Ombudsman. The mechanism of an adjudication by the Insurance Ombudsman is an alternative dispute redressal mechanism envisaged in the RPG Rules, 1978. Therefore, a claimant under a policy has to necessarily go before the Insurance Ombudsman in the first place for redressal. The insurance companies have themselves devised this dispute redressal mechanism. They have also bound themselves unconditionally to honour such Award of such Insurance Ombudsman. It is too late in the day for Respondent No. 1 to seek to wriggle out of the Awards dated 18th March 2004 and 26th April 2005 of the Insurance Ombudsman on any ground whatsoever. The decision in B. Krishna Bhat was in a different set of facts. In that case there was no order of the Insurance Ombudsman that was binding on the insurance company.
The Award dated 18th March 2004 has in fact been acted upon by Respondent No. 1, but for some reason, only in part. The reasons for not renewing the policy continuously from 30th July 2003 as mandated by the Award dated 18th March 2004 are both unconvincing and unacceptable. The Award is unambiguous that the renewal had to be on the basis that the policy is ''continued'' with effect from 30th July 2003. As held in subsequent Award dated 26th April 2005, Respondent No. 1 ought to have collected the premium pro rata for the period 30th July 2003 to 14th April 2004 and renewed the mediclaim policy of the deceased Petitioner for this period as well.
The communication dated 18th March 2004 from the office of the governing body of the General Insurance Council at Mumbai advising the Insurance Ombudsman not to entertain complaints in respect of non-renewal of mediclaim policies, was issued on the same date as the Award of the Insurance Ombudsman i.e. 18th March 2004 Without examining the question of validity of such advice, this Court is of the view that the said advice could not govern the Award dated 18th March 2004 which had already been passed on that day in respect of the complaint of the Petitioner which was made prior thereto.
Consequently, the writ petition is allowed with a direction to Respondent No. 1 to communicate to the Petitioner''s LRs the pro rata premium amount payable for the renewal of the mediclaim policy of the Petitioner for the period 30th July 2003 to 14th April 2004 within a period of two weeks from today. The LRs of the deceased Petitioner will make the payment of the said premium amount within a further period of two weeks thereafter. Within a further period of four weeks thereafter, Respondent No. 1 will process all the claims made by the Petitioner during the period i.e. 30th July 2003 to 14th April 2004 and reimburse to the LRs of the Petitioners the said claims to the extent they are found admissible. The amount found admissible will be paid with simple interest at 6% p.a. from the date of the claim till the date of its payment.
With the consent of the other LRs, the payment be made to Smt. Veena Aneja the wife of the deceased Petitioner. Absent such consent, the amount will be paid in three equal shares by three separate cheques in favour of each of the three LRs. The writ petition is accordingly allowed in the above terms, in the circumstances with no order as to costs.