- (1.) The appellant herein and his wife Smt. Alka Bose, took out a medi-claim insurance policy from the respondent United india Insurance Company (hereinafter referred to as 'insurance Company') on 14/12/1990. In July 1991, Smt. Alka Bose fell ill and as per advice of the doctor she was admitted to a hospital on 14/08/1991. She paid Rs. 8,2431- towards the charges for her treatment to the hospital. On 30/08/1991 the appellant lodged a claim for Rs. 8,243. 00 with the insurance company along with necessary papers. Despite repeated requests the claim was not honoured, with the result the appellant approached the district Consumer Grievance Redressal forum (District Forum Calcutta) but the said complaint was rejected. On appeal before the State Commission, the order of the District Forum was set aside and direction was issued to the respondent insurance company to pay to the appellant a sum of Rs. 8,243. 00. The insurance company thereafter went in revision before the National Consumer Redressal commission which allowed the revision and set aside the order of the State Commission. Aggrieved, the appellant filed an appeal before this Court. On 10/05/1995 this Court allowed the appeal with costs which was quantified at Rs. 20,000/ despite the order of this Court, the payment was not made with the result the appellant had to take further proceedings. While the said litigation was going on, appellant's policy fell due for renewal. Under such circumstances, the appellant on 24.1.1996, sent a letter along with a cheque of Rs, 1,796/- to the respondent insurance company requesting for renewal of his existing medi-claim policy. On 7.3.1996, the insurance company declined to renew the medi-claim policy as per the advice of the competent authority of the company. Under the aforesaid circumstances, the appellant filed a writ petition under Article 226 of the Constitution before the Calcutta High Court challenging the order passed by the respondent insurance company refusing to renew the medi-claim policy. The said writ petition was allowed and the order refusing to renew the policy was set aside and a direction was issued to the insurance company to renew the medi-claim policy earlier taken out by the appellant. Aggrieved, the respondent insurance company filed an appeal against the judgment of learned Single Judge. The Division bench of the Calcutta High Court while agreeing with the view taken by the learned Single Judge substantially dismissed the appeal. Yet, the High Court directed the appellant to take fresh medi-claim policy, as the renewal of medi-claim policy cannot be granted with retrospective effect, as the period of which renewal was required has already expired. It is against the said part of the order the appellant has preferred this appeal.
(2.) The appellant, Biman Krishna Bose, has appeared in person. He argued that the High Court even after setting aside the order refusing to renew the policy, was not justified in directing the appellant to take fresh medi-claim policy. According to the appellant, by the said order of the High Court he has been placed at a great disadvantageous position. The appellant referred to the exclusion clause of the policy taken out by him. Relevant clauses 2.1 and 2.1.14 of the medi-claim policy run as under: "2.1 - The Company shall not be liable to make any payment under this policy in respect of any expenses whatsoever incurred by any Insured Person in connection with or in respect of: -. . . . . 2.1.14 -All diseases/injuries which are preexisting when the cover incepts for the first time. "on the strength of the exclusion clause, the appellant urged that in case the appellant is required to take fresh medi-claim policy, all the diseases which have surfaced during the period the policy was not renewed shall be treated as pre-existing diseases and the same would neither be covered by the fresh policy nor he will be paid the money which he has incurred for treatment of the said diseases during the relevant time and, therefore , the order of the High Court be set aside. We find substance in the argument.
(3.) Under Section 9 of the General insurance Business (Nationalisation) Act, 1972 (hereinafter referred to as the 'act') , general Insurance Corporation of India (in short GIC) was set up as a government company for the purpose of superintendence , control and carrying out the business of general insurance in the country. Under Section 24 of the Act, the acquiring companies were given the exclusive privilege to carry on general insurance business in India. Under Section 3 (a) of the Act, an acquiring company has been defined to mean any Indian Insurance company in which any other company has been merged in pursuance to the amalgamation scheme formulated under the Act. The respondent insurance company is one of such acquiring companies. A perusal of the provisions of the act makes it evident that it is only the acquiring companies which have exclusive privilege of carrying on the general insurance business in India, under the supervision and control of General Insurance corporation of India. Excepting the acquiring companies no other company in private sector has a right and privilege to carry on general insurance business in India and to that extent the acquiring companies have a monopoly over such business. In such a situation, acquiring companies have the trappings of "the state" being other authorities under Article 12 of the Constitution of India. The acquiring companies thus being "the I state" under Article 12 of the Constitution are expected to act fairly and reasonably. In the present case, what we find is that the respondent insurance company refused to renew the insurance policy of the appellant on the ground of his past conduct. The past conduct attributed is that the appellant had gone in litigation for payment of his claim lodged by him with the respondent insurance company. If an insured lodges a claim with the company and the company does not honour the claim, the insured is left with no alternative but to knock the doors of court of law. Merely because the appellant had approached the Consumer forum and this Court for redressal of his grievance, can such an act be attributed as bad record as to dis-entitle the appellant to get his policy renewed. The answer is 'no'. Where an insurance company under the provisions of the Act having assumed monopoly in the business of general insurance in the country and thus acquired the trappings of the 'state' being other authorities under Article 12 of the Constitution, it requires to satisfy the requirement of reasonableness and fairness while dealing with the customers. Even, in an area of contractual relations, the State and its instrumentalities are enjoined with the obligations to act with fairness and in doing so, can take into consideration only the relevant materials. They must not take any irrelevant and extraneous consideration while arriving to a decision. Arbitrariness should not appear in their actions or decisions. In the present case, what we find is that arbitrariness is writ large in the actions of the respondent company when it refused to renew the medi-claim policy of the insured on the ground of his past conduct i. e. having gone into litigation for payment of his claim against the respondent company. We are, therefore, in agreement with the view taken by the high Court that the order of the respondent company refusing to renew the medi-claim policy of the appellant was unfair and arbitrary.;