Case Note & Summary
The dispute arose from the refusal of United India Insurance Company to renew a mediclaim policy taken out by the appellant, Biman Krishna Bose, and his wife. The policy was initially purchased on December 14, 1990, and after the appellant's wife incurred treatment costs in August 1991, a claim was lodged but not honored. Following a series of legal proceedings, the appellant sought renewal of the policy in January 1996, which was declined by the insurance company. The appellant challenged this refusal in the Calcutta High Court, which set aside the refusal but directed him to take a fresh policy instead of renewing the existing one. The appellant contended that this directive placed him at a disadvantage due to the exclusion clause in the policy regarding pre-existing conditions. The Supreme Court found merit in the appellant's argument, stating that the insurance company’s refusal was arbitrary and based on irrelevant considerations, specifically the appellant's previous litigation for claim payment. The court emphasized that the insurance company, as a state entity under Article 12 of the Constitution, was required to act fairly and reasonably. It ruled that the policy should be renewed retroactively from the date it fell due, rejecting the insurance company's argument regarding premium payment issues. The court set aside the High Court's directive for a fresh policy and ordered the insurance company to renew the existing policy upon the appellant's application and payment of the premium. The appeal was allowed with costs quantified at Rs. 5,000.
Headnote
A) Insurance Law - Policy Renewal - Refusal to Renew - General Insurance Business (Nationalisation) Act, 1972, Section 9 - The insurance company acted arbitrarily in refusing to renew the mediclaim policy based on the appellant's litigation history, which cannot be deemed as bad conduct. The court held that the policy must be renewed from the date it fell due, as the refusal was unreasonable and unfair (Paras 1-4).
Issue of Consideration
Whether the insurance company was justified in refusing to renew the mediclaim policy based on the appellant's past conduct and whether the policy should be renewed retroactively.
Final Decision
The Supreme Court set aside the High Court's order directing the appellant to take a fresh mediclaim policy and ruled that the insurance company must renew the existing policy from the date it fell due upon payment of the premium. The appeal was allowed with costs quantified at Rs. 5,000.
Law Points
- Insurance policy renewal
- General Insurance Business (Nationalisation) Act
- 1972
- exclusion clause
- arbitrariness in decision-making
