- Bookmark
- Share
- CaseIQ
Talvinder Choudhary Petitioner v. Union Of India & Anr. S
Factual and Procedural Background
The petitioner had a Medical Claim Insurance Policy with respondent No. 2 (Oriental Insurance Company Limited) taken in 1997 and renewed yearly until 28.12.2002. The petitioner made one claim in 1998 which was paid. The petitioner contends that the Development Officer of respondent No. 2, Mr. Trilochan Singh, who used to collect renewal premiums, failed to call to collect the premium when the policy fell due. The petitioner visited respondent No. 2 on 21.02.2003 and applied for renewal. The new policy was issued but contained an exclusion clause for "Cardiac Arrest Disease and related diseases", apparently because of the 1998 claim. The petitioner wrote on 25.02.2003 requesting removal of the exclusion and had also made a written complaint about Mr. Trilochan Singh on 21.02.2003. Respondent No. 2 replied on 28.05.2003 refusing to remove the condition and stating the petitioner should have sought renewal within the stipulated time.
In a counter-affidavit the respondents argued that the relief sought would amount to specific performance which, they contended, could not be granted under Article 226 of the Constitution; they also stated that because of the delay the petitioner was treated as making a fresh proposal that was medically examined and therefore the inclusion of the exclusion clause was justified. The respondents relied on policy condition No. 5.9 (renewal by mutual consent) and denied that the Development Officer routinely collected renewals from the petitioner.
Legal Issues Presented
- Whether the High Court can exercise jurisdiction under Article 226 to grant relief directing renewal of an insurance policy where the insurer refused to renew on terms previously offered.
- Whether an insurer may lawfully introduce an exclusion clause (for Cardiac Arrest Disease) in a renewed policy issued after a short delay (approximately two months) when past renewals had been on identical terms.
- Whether the short delay in renewal (less than about two months) and the fact that a Development Officer allegedly used to collect premiums justify treating the application as a fresh proposal leading to exclusion.
Arguments of the Parties
Petitioner's Arguments
- The petitioner relied on the past practice of renewals on identical terms between 1997 and 2002 and the fact that only one claim (1998) had been made and paid.
- The petitioner asserted that the Development Officer, Mr. Trilochan Singh, used to collect premium renewals and failed to do so on this occasion despite reminders; this practice created a reasonable expectation that the officer would collect the premium.
- The petitioner sought removal of the exclusion clause and renewal on the same terms as before, and complained about the conduct of the Development Officer.
Respondents' Arguments
- The respondents contended that granting the petitioner's relief would amount to specific performance of an agreement and that such relief is not available in proceedings under Article 226.
- They stated the petitioner approached after about two months' delay; therefore a fresh proposal was taken and medically examined by a panel doctor, justifying the inclusion of the exclusion clause.
- Reliance was placed on policy condition No. 5.9 that renewal is by mutual consent and there is no requirement to give notice to the policy-holder for renewal.
- While admitting the existence of Mr. Trilochan Singh as a Development Officer, the respondents denied that he routinely called on the petitioner to renew the policy.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Biman Krishna Bose v. United India Insurance Co. Ltd. & Anr., (2001) 6 SCC 477 | The Supreme Court held that where renewal is denied on arbitrary or extraneous considerations, the insurer cannot be allowed to deny renewal; the policy should be renewed retrospectively from the date it fell due if the insurer's refusal was arbitrary. | The court relied on this authority to reject the maintainability objection and to support the proposition that arbitrary refusal to renew must be remedied; it treated Biman Krishna Bose as dispositive on the question of intervening arbitrary action by insurers and used it to justify ordering renewal on past terms (without the contested exclusion) in the present facts. |
| Ashok Kumar Dhingra & Ors. v. The Oriental Insurance Company Limited & Ors., 2003 (70) DRJ 470 | A Single Judge considered Biman Krishna Bose and addressed issues including maintainability; in that case, the court also held that loading of additional premium on account of past medical history could be lawful and not arbitrary. | The present court referred to this decision for the question of maintainability and to distinguish the present facts: unlike in Dhingra where loading was at issue and found lawful, in the present case there was no additional premium loading and the court found the inclusion of the exclusion clause unjustified. |
Court's Reasoning and Analysis
The court proceeded by identifying the limited question before it: whether the exclusion clause for "Cardiac Arrest Disease and related diseases" should have been included in a policy issued after a delay of less than two months, given the prior practice of renewal on the same terms.
Key elements of the court's analysis included:
- Recognition of past practice: The petitioner had received renewals on identical terms for five years (1997–2002) and the insurer did not dispute that had the petitioner approached in time, renewal would have been on the same terms.
- Role of the Development Officer: The court accepted that Development Officers customarily remind policy-holders and collect premiums, and that the existence of Mr. Trilochan Singh as a Development Officer was not denied. Given the petitioner's assertion (and a written complaint made on 21.02.2003), the court found that the past practice of the Development Officer approaching the petitioner could not be ignored and gave rise to a reasonable expectation.
- Shortness of delay and lack of suspicion of new risk: The policy expired on 28.12.2002 and the petitioner sought renewal on 21.02.2003 — a period of less than two months. The petitioner did not seek cover for the interregnum (the lapse period), and there was no assertion by respondent No. 2 that the petitioner had suffered any new medical problem during the delay which would justify treating the application as an attempt to cover a new disease. The petitioner had not made any claim for four years after the 1998 incident.
- Application of precedent: The court relied on Biman Krishna Bose to the effect that arbitrary refusals to renew cannot be permitted; if the refusal is arbitrary, the policy must be renewed from the date it fell due. The court also considered Ashok Kumar Dhingra, noting that while loading of premium for past history may sometimes be lawful, no such loading or additional premium was imposed here.
- Conclusion from facts: Given the brief delay, the past practice of renewals through the Development Officer, the absence of any fresh medical event or claim, and the insurer's admission that renewal would have been on same terms if approached in time, the court found no rationale for introducing the exclusion clause in the renewed policy. The court characterized the inclusion of the exclusion as unjustified in the specific circumstances.
Holding and Implications
Holding:
The writ petition is allowed; a writ of mandamus is issued quashing the condition in the renewed Medical Claim Insurance Policy that excluded Cardiac Arrest Disease and related diseases, and the petitioner is entitled to renewal of the policy on the same terms and conditions as in the past.
Implications and direct effects:
- The petitioner is to be issued a renewed mediclaim policy on the same terms and conditions as those prevailing for the previous five years, without the exclusion for Cardiac Arrest Disease and related diseases.
- This relief is subject to the petitioner meeting future premium payment obligations and subject to any guidelines the insurance company may adopt in future for renewal of mediclaim policies.
- The court confined its remedy to ordering renewal on the past terms; the opinion does not purport to lay down a broad new precedent beyond applying existing Supreme Court authority (Biman Krishna Bose) to the facts. The decision orders relief in the specific factual circumstances rather than announcing a novel general rule.
- Costs: The rule was made absolute with the parties left to bear their own costs.
This summary is limited strictly to the information contained in the provided opinion and does not add or infer any facts or holdings beyond that text.
Sanjay Kishan Kaul, J.:— The refusal of respondent No. 2, Oriental Insurance Company Limited, to renew the Medical Claim Insurance Policy of the petitioner on the same terms and conditions as in the past has given rise to the present petition.
2) The petitioner took a Medical Claim Insurance Policy with respondent No. 2 in the year 1997 and the policy was renewed from year to year till 2002. There is only one claim made in the year 1998 which had been paid. The last renewal of the policy expired on 28.12.2002 and it is the contention of the petitioner that the Development Officer of respondent No. 2, Mr. Trilochan Singh, who used to take the renewal premium every year, failed to turn up to take payment of the premium. The petitioner on 21.02.2003 then personally went to the office of respondent No. 2 and applied for Medical Claim Insurance Policy. However, though the policy was issued, there was an exclusion clause provided for Cardiac Arrest Disease and related diseases. Thus, the treatment relating to cardiac arrest was excluded apparently on the basis of the fact that in the year 1998, the petitioner had suffered a similar problem when payments had to be made under the policy. The petitioner vide letter dated 25.02.2003 called upon respondent No. 2 to remove the said condition. The petitioner in the said letter stated that there was no delay in the past by the petitioner over five years and that it was Mr. Trilochan Singh, who did not come to collect payment of the premium as in the past despite repeated reminders, but was insisting that he wanted the insurance to be done from a private company. It may be noticed that even on 21.02.2003 when the petitioner went to the office of respondent No. 2, a complaint had been made by the petitioner in writing about Mr. Trilochan Singh. The request of the petitioner was, however, declined by the letter dated 28.05.2003 stating that the petitioner ought to have visited the office of respondent No. 2 well within the stipulated time for renewal of Medical Claim Insurance Policy.
3) In the counter affidavit, the respondents have sought to take the defence that the grant of relief to the petitioner would amount to a specific performance of an agreement, which cannot be done in the proceedings under Article 226 of the Constitution of India. In so far as the merits are concerned, it is stated that the petitioner approached respondent No. 2 after almost two months delay and in view thereof, fresh proposal was taken from the petitioner and was got examined from a panel doctor. It was in view thereof that the exclusion clause was included. It is stated that had the petitioner renewed the policy in time as in the past, the occasion to insert exclusion clause would not have arisen and the policy would have been renewed as per the past practice. Emphasis has also been laid on the fact that the policy condition No. 5.9 clearly stipulates that the policy may be renewed by mutual consent and there is no requirement to give notice to a policy-holder for renewal. The factum of Mr. Trilochan Singh being the Development Officer in respondent No. 2 company is not denied, though it is denied that he used to go to get the policy renewed from time to time.
4) Learned counsel for the petitioner strongly relied upon judgment of the Supreme Court in Biman Krishna Bose v. United India Inr surance Co. Ltd. & Anr., (2001) 6 SCC 477. A reading of the said judgment shows that a number of aspects raised in the present matter are, in fact, no more res Integra in view of the said judgment of the Supreme Court. This judgment has also been considered by a learned Single Judge of this Court in Ashok Kumar Dhingra & Ors. v. The Oriental Insurance Company Limited & Ors., 2003 (70) DRJ 470. The issue of maintainability of writ petition was discussed in Ashok Kumar Dhingra's case (supra) and it was noticed that in Biman Krishna Bose's case (supra), the exercise of jurisdiction by the High Court under Article 226 of the Constitution of India in a similar matter was, in fact, not disapproved and the Supreme Court went on to grant relief. I am inclined to take the same view and, thus, the present petition ought not to be thrown out merely on the ground of maintainability.
5) The Supreme Court in Biman Krishna Bose's case (supra) was of the view that where renewal of the policy is denied on extraneous considerations which are arbitrary, an insurer cannot be denied even the retrospective benefit of the same, who would have been insured for treatment of the disease during the relevant period of time. It was felt that this would give a handle to the insurance companies to refuse the renewal of policies and would have disastrous effect. The Supreme Court was, thus, of the considered view that once it was found that the act of the insurance company was arbitrary in refusing to renew the policy, the policy is required to be renewed with effect from the date when it fell due for its renewal. It may be noticed that in the said case, the renewal had been denied on the ground that the petitioner therein had litigated in various courts with the insurance company about certain claims. This was found to be arbitrary since the petitioner had admittedly succeeded in the claims.
6) In Ashok Kumar Dhingra's case (supra), a further issue was raised about the loading of additional premium on account of past medical history and such loading was found to be in accordance with law and not arbitrary.
7) In the present case, there is no dispute about the fact that a renewal has been made. There is no loading also of any additional premium on the petitioner in view of any past history. This is possibly so since over a period of five years of premium being paid in time, there was only one claim which had been lodged by the petitioner in the year 1998.
8) The limited question, which arises for consideration, is whether the exclusion clause should be included in the new policy merely on account of the fact that there has been some delay in the petitioner renewing Medical Claim Insurance Policy.
9) In order to appreciate the aforesaid, it is also necessary to see the reason why there was such a delay. The petitioner claims that one Mr. Trilochan Singh used to approach him and take payment of the premium every year and the petitioner had contacted Mr. Trilochan Singh on a number of occasions, but he had failed to collect payment of the premium. There is no doubt that the obligation of making the payment of premium was on the petitioner. However, it is a matter of common knowledge that there is a practice of the Development Officers reminding insurers and collecting premiums. The existence of Mr. Trilochan Singh as a Development Officer with respondent No. 2 is not denied. The Development Officer advances business of the insurance company. The allegation of the petitioner that there had been past practice of Mr. Trilochan Singh approaching him to collect the premium cannot, thus, be ignored.
10) The policy expired on 28.12.2002 The petitioner approached respondent No. 2 company on 21.02.2003 Thus, there was a delay of less than about two months. The petitioner is not saying that he should be covered for the period of lapse. It is also not the case of respondent No. 2 that during this period of said two months, the petitioner had suffered some medical problem or contracted a new problem which could give rise to apprehension in the mind of the Officers of respondent No. 2 that it was an endeavour to cover some new disease. Even after the problem of 1998 for a period of four years, the petitioner has not made any claim.
11) Respondent No. 2 company also does not dispute that as per its policy, if the petitioner had approached within time, the policy would have been renewed on the same terms and conditions. The problem has arisen only on account of the fact that the case of the petitioner has been treated as one of a fresh policy in view of there being a delay of about two months,
12) In my considered view, in the given facts of the case, there is no rationale for the same. The delay of less than two months is not such as to deprive the petitioner of the benefit of a policy on the same terms and conditions as was given in the past. It is not an effort on the part of the petitioner to cover up any new medical problem. It has to be appreciated that the practice of having Development Officers is with the object not, only of encouraging the business of the insurance company, but also to meet certain social obligations since elderly people at times may find it problematic to visit office of the insurance company personally and follow up the matter. The Development Officer is like an inter-face. Mr. Trilochan Singh was dealing with the policy of the petitioner in the past. Even though as per the terms and conditions of the policy, there was no obligation to intimate the petitioner about expiry of the policy, such past practice would show that the petitioner would have a reasonable expectation that the Development Officer would approach him. In fact, in the present case, the petitioner has stated* that he reminded the Development Officer to collect the cheque, but to no avail since admittedly the Development Officer was interested in developing business for some private company. I find it difficult to draw a conclusion from submission of the medical reports of the petitioner or otherwise that the petitioner tried to approach private companies and having not been successful in the same sought renewal of his Medical Claim Insurance Policy. This is an allegation in the counter affidavit.
13) The issue is not also one of covering the interregnum period or any part of the claim of the petitioner. The limited issue is one of treating the policy issued in the year 2003 to the petitioner as one in continuity of the earlier policies and, thus, applying the same terms and conditions without the exclusion clause in respect of'Cardiac Arrest Disease'.
14) I am of the considered view that the petitioner is entitled to have a Medical Claim Insurance Policy on the same terms and conditions as in the past five years and the exclusion clause should not be made applicable to the petitioner in the given facts and circumstances of the case.
15) A writ of mandamus is, thus, issued quashing the condition imposed in the Medical Claim Insurance Policy of the petitioner excluding the Cardiac Arrest Disease and related diseases and consequently, the petitioner would be entitled to renewal of the policy on the same terms and conditions subject to the petitioner meeting with the obligation of making payment of the premium in future. This would, however, be subject to any guidelines of the insurance company in future for renewal of any mediclaim policies.
16) Rule is made absolute leaving the parties to bear their own costs.
Alert