CWP No. 5421 of 2009. ::-1-:: IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH. C.W.P. No. 5421 of 2010. [O&M] Date of Decision: 4th August 2010. Mukesh Sharma Petitioner through Mr. Gurpreet Singh, Advocate with Mr. Susheel Gautam, Advocate. Versus Life Insurance Corporation of India & Anr. Respondents through Mr. B.R.Mahajan, Advocate. CORAM: HON'BLE MR. JUSTICE SURYA KANT. 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? SURYA KANT, J. [ORAL] The petitioner seeks quashing of the order/letter dated 05.08.2007 [Annexure P-4] whereby the respondent – Life Insurance Corporation has declined to revive the three Insurance Policies taken by him. [2]. Shorn of the details, it may be mentioned here that the petitioner took following three Insurance Polices from the respondents:- “[i] 20 years' Jeevan Surbhi Policy No. 170615741 dated 1st March, 1993 [Date of maturity 2013, sum assured Rs. 5 lacs. [ii] 20 years Jeevan Surbhi Policy No. 170815326 dated 28th December, 1994 [Date of maturity 2014], sum assured Rs. 1 lac. [iii] New Jeevan Shree Insurance Policy No. 162219663 dated 30th March, 2002 for 25 years for a sum assured CWP No. 5421 of 2009. ::-2-:: Rs.5 lacs [Date of maturity 2027]”. [3]. It is not in dispute that the petitioner has been depositing the due premium regularly except that he defaulted in March, 2006, December, 2005 and February, 2006 respectively in relation to the three Insurance Policies. Due to non-deposit of the one installment of each policy, the same stood lapsed. [4]. Similar worded Clause 3 of all the three Insurance Polices reads as follows:- “3. Revival of Discontinued Policies:- If the policy has lapsed, it may be revived during the life time of the Life Assured, but within a period of 5 years from the date of the first unpaid premium and before the date of maturity, on submission of proof of continued insurability to the satisfaction of the Corporation, and the payment of all the arrears of premium together with interest at such rate as may be fixed by the Corporation from time to time compounding half yearly. The Corporation reserves the right to accept or decline the revival of discontinued policy. The revival of a discontinued policy shall take effect only after the same is approved by the Corporation and is specifically communicated to the Life Assured”. [Emphasis applied]. [5]. The petitioner applied for renewal of the three Insurance Policies along with amount of the unpaid premium with interest but his request has been declined vide the impugned order dated 5.8.2007 without assigning any reason. [6]. In their reply-affidavit, the solitary plea taken by the respondents is that the petitioner was required to furnish proof of “continued insurability” to the satisfaction of the Corporation which he has failed to do as on medical examination, he has been found to be CWP No. 5421 of 2009. ::-3-:: suffering from [a] adverse ECG findings; [b] FBS-166, PGBS-225 and Urine+++; [c] Uncontrolled Diabetes Mellitus and [d] Overweight with BMI as 33. [7]. The second objection taken by the respondents is that the petitioner had earlier approached the Consumer Forum under the Consumer Protection Act, 1986 and the District Forum as well as the State Consumer Disputes Redressal Commissioner have declined him the desired relief. [8]. I have heard learned counsel for the parties at some length and perused the records. [9]. There is indeed no serious dispute that the District Consumer Forum and the State Consumer Disputes Redressal Commission rejected the petitioner's claim primarily on the ground that the complaint was not maintainable as it was not a case of any deficiency in service but was of non-renewal of contract between the parties. The orders passed by the Consumer Forum, thus, do not help the respondents. [10]. On the other hand, the right of the petitioner to seek renewal/revival of the Insurance Policies taken by him need to be determined in the light of the principles laid down by the Hon'ble Supreme Court in United India Insurance Company Limited v Manubhai Dharamsinghbhai Gajera, [2008] 10 SCC, 404, wherein after taking notice of the concept of liberal economic policy, it has been ruled that:- “31. We have, despite the new economic policy of the Central, no option but to proceed on the assumption that the public sector insurance companies being a State CWP No. 5421 of 2009. ::-4-:: have a different role to play. It is not to say that as a matter of policy statutory or otherwise the insurance companies are bound to regulate all contracts of insurance having the statement of Directive Principles in mind but there cannot be any doubt whatsoever that fairness or reasonableness on the part of the insurance companies must appear in all of its dealings”.[Emphasis applied]. [11]. It was further held that the public sector Insurance Companies like the respondent are obligated to act in a fair and just manner and can not refuse renewal of the policy arbitrarily. Paras 64 and 65 of the report in this regard read as follows:- “64. Each of the aforementioned cases clearly shows that the action on the part of the authorities of the appellant was highly arbitrary. Respondents though were not entitled to automatic renewal, but indisputably, they were entitled to be treated fairly. We have noticed hereinbefore some of the clauses contained in the prospectus as also the insurance policy. When a policy is cancelled, the conditions precedents therefor must be fulfilled. Some reasons therefor must be assigned. When an exclusion clause is resorted to, the terms thereof must be given effect to. What was necessary is a pre-existing disease when the cover was inspected for the first time. Only because the insured had started suffering from a disease, the same would not mean that the said disease shall be excluded. If the insured had made some claim in each year, the insurance company should not refuse to renew insurance policies only for that reason. The words ‘incepts for the first time’ as contained in clause 4.1 as also the words ‘continuous and without break’ if the renewal premium is paid in time, must be kept in mind as also the reasons for cancellation as contained in clause 7 (1)(n) thereof. CWP No. 5421 of 2009. ::-5-:: 65. Renewal of a medi-claim policy subject to just exceptions should ordinarily be made. But the same does not mean that the renewal is automatic. Keeping in view the terms and conditions of the prospectus and the insurance policy, the parties are not required to go into all the formalities. The very fact that the policy contemplates terms for renewal, subject of course to payment of requisite premium, the same cannot be placed at par with a case of first contract”. [Emphasis applied] [12]. In the case of the petitioner also, the revival of the policies has been declined on the solitary ground that the petitioner has failed to satisfy the “continued insurability”. The plea, suffice it to observe, is totally arbitrary and illogical for the obvious reason that the first policy was purchased by the petitioner in March, 1993 and during long period of over 17 years if he has been able to maintain himself hale and hearty with minor health hazards, it can not be said that the petitioner does not satisfy the test of insurability. Neither the fluctuating ECG or the petitioner being a diabetic are sufficient to categorise him “insurable”, nor the health conditions as were existing when the policies were taken, can be insisted upon at the time of their renewal. Since Clause 3 of the policies expressly enables the policy holder to seek revival within a period of five years from the date of first unpaid premium and before the date of its maturity, on submission of proof of continued insurability, the petitioner is also entitled to seek their renewal subject to payment of unpaid premium, if any, along with interest up-to-date. [13]. For the reasons aforementioned, the writ petition is allowed; the impugned order dated 05.08.2007 [Annexure P-4] is hereby quashed and the respondents are directed to renew the three CWP No. 5421 of 2009. ::-6-:: policies in question taken by the petitioner within a period of three months from the date a certificate copy of this order is received, subject to his deposit of the due premium, as directed above. [14]. Dasti. August 04, 2010. ( SURYA KANT ) dinesh JUDGE