BEFORE THE A.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION
AT HYDERABAD.
F.A. 1639/2008 against C.C. 3/2006, Dist. Forum, Warangal.
Between:
1. B. Venkat Reddy
S/o. Ranga Reddy
Age: 54 years
2. B. Rukminamma
W/o. B. Venkat Reddy
Both R/o. Burgampahad village
Chilukodu Post, Dornakal Mandal
Warangal Dist. *** Appellants/
Complainants
And
1. Andhra Bank
Rep. by its Branch Manager
103, Dornakal Village & Mandal
Warangal Dist. *** Respondent/
O.P. No. 1
2. United India Insurance Company Ltd.
Rep. by its Divisional Manager
Divisional Office- 4, 2nd Floor
Possenette Bhavan, Tilak Road
Hyderabad. *** Respondent/
O.P. No. 2.
Counsel for the Appellants: M/s. Kalpana Kilaru
Counsel for the Respondent: M/s. K. Sridhar Rao- R1
M/s. G. Sundar Ramayya- R2.
CORAM:
HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT
&
SMT. M. SHEREESHA, MEMBER
THURSDAY, THIS THE NINETEENTH DAY OF AUGUST TWO THOUSAND TEN
Oral Order: (Per Hon’ble Justice D. Appa Rao, President)
*****
1) Appellants are unsuccessful complainants.
2) The case of the complainants in brief is that they are man and wife and had taken Arogya Daan medi-claim policy bearing Nos. 050400/48/05/00551 and 050400/48/05/00551 from R2 during the year 2004-2005 and they were in force up to 8.6.2005. The insurance company by its letter directed them to pay premium on or before 8.6.2005 to avail renewal
benefits. By showing the said letter to the Branch Manager of R1 bank, they deposited Rs. 2,043/- at Andhra Bank, Dornkal branch on 3.6.2005 within the stipulated period for renewal of coverage from 9.6.2005 to 8.6.2006. Under the terms of the policy they are entitled to have cashless facility for taking treatment in any net-work hospitals listed in the guide. When wife (complainant No. 2) had suffered from severe anaemia she approached Cure Hospital, Khammam which is one of the hospitals covered by the terms of the policy. The hospital authorities had assessed approximate expenditure at Rs. 15,000/- for which R2 sent a letter dt. 28.7.2005 stating that they would guarantee payment up to Rs. 10,000/-. An amount of Rs. 15,000/- was incurred. However the insurance company denied payment on the ground that the claim falls under 30 days of waiting period. While so complainant No. 1 had suffered from eye problem approached L.V. Prasad Eye Institute, Hyderabad which is one of the net work hospitals listed in the guide. On 17.8.2005 he was examined and the hospital had assessed an approximate amount of Rs. 21,000/-. However, R2 denied by its letter dt. 18.8.2005 for extending cashless facility on the ground that the cataract comes under first year exclusion clause of the medi-claim policy. In fact they paid the premium towards renewal of policy and not for issuance of fresh policy. Therefore the repudiation was unjust. Even though they had paid the amount towards renewal of premium by 3.6.2005 they learnt that R1 Andhra Bank sent the premium on 30.6.2005 belatedly and therefore the renewal was not made. Since R1 did not remit the premium R2 was refusing to pay the amount of Rs. 21,000/- incurred by them. Therefore they filed the complaint directing an amount of Rs. 15,000/- spent towards treatment of complainant No. 2 and direct the insurance company to provide cashless facility besides compensation of Rs. 75,000/- for causing mental agony and Rs. 5,000/- towards expenses.
3) R1 Andhra Bank resisted the case. It admitted that complainants were policyholders under the medi-claim policies issued by R2 which are in force up to 8.6.2005, and the fact of payment of premium for renewal has been very much communicated to R2 insurance company. R2 has no liberty to treat the amounts received towards renewal of the policy for any other purpose. In case of non-renewal it ought to have returned back the amount. The appropriation of part of amounts of renewal premium would undoubtedly disclose that it had agreed for renewal of policy. Instead it had issued a fresh policy with effect from 30.6.2005 to 29.6.2006. R2 cannot repudiate the claim of the complainants. There was no negligence or deficiency in service on its part, and therefore prayed for dismissal of the complaint with costs.
4) R2 insurance company equally resisted the case. It alleged that the treatment taken by complainant No. 2 for the period from 27.7.2005 to 2.8.2005 was repudiated on the ground that she was suffering from severe anaemia which is general weakness/run down condition excluded from the medi-claim policy. There is a clear exclusion and also falling within first 30 days exclusion from the date of commencement of policy. The complainants are not entitled to get reimbursement for the treatment taken at Cure Hospital, Khammam. Equally estimate given for the treatment expenditure of Rs. 21,000/- for undergoing cataract operation was repudiated due to exclusion within one year under the policy. The complainants did not get the policy renewed as requested by their letter. The allegation that they have paid the premium on 3.6.2005 was not admitted. The premium was paid only after 22 days after, expiry of the previous policy. Hence fresh policy was issued with effect from 30.6.2005 to 29.6.2006. The terms and conditions will apply to the policy holders as if it is a fresh policy. They cannot be termed as renewed policyholders. They have rightly repudiated the claims. Simply because they have paid the premium to R1 bank, and due to its negligence in turn it did not pay in time to have the continuation of risk, it cannot be a ground for claiming the amount. They were not liable to pay any of the amounts claimed by the complainants and therefore prayed for dismissal of the complaint with costs.
5) complainants in proof of their case filed affidavit evidence and got Exs. A1 to A26 marked while R1 filed the affidavit evidence of its Branch Manager and R2 filed the affidavit evidence of its Asst. Divisional Manager and got Ex. B1 Photostat copy of letter addressed to R1 bank.
6) The Dist. Forum after considering the evidence placed on record opined that the policy was lapsed due to delay in remittance of premium by R1 to R2. As there was lapse of 22 days in between first policy and the next policy it was considered as fresh policy and consequently neither of them was liable to pay the amount and consequently dismissed the complaint.
7) Aggrieved by the said decision, the complainants preferred the appeal contending that the Dist. Forum did not appreciate either facts or law in correct perspective. They contended that they had remitted the premium for renewal of policy on 3.6.2005 long before its expiry on 8.6.2005 and non-remittance of amount by R1 bank to the insurance company would not entail repudiation of their claim. They are entitled for reimbursement of the amount and other benefits.
8) The point that arises for consideration is whether the order of the Dist. Forum is vitiated by mis-appreciate of fact or law?
9) It is an undisputed fact that R2 insurance company has a tie up with R1 Andhra Bank covering the medi-claim family health plan for the account-cum-policyholders. The complainants’ man and wife had taken the medi-claim policy for the year 2004-2005 and for the subsequent year the insurance company by its letter Ex. A25 directed them to renew the policy by paying premium at Andhra Bank on or before 8.6.2005 to avail renewal benefits. In Ex. A25 both R1 and R2 made clear that “We thank you for your interest shown for enrolling yourself and your family members during the year 2004-2005 under A.B. Aryogyadaan Mediclaim Policy. Your family details available with us are as under:
| UHID No. | Name | Relationship | Age | Gender |
| FHAU-350546 | S. Lakshma Rao | Self | 62 years | Male |
| FHAU-350548 | S. Rambai | Wife | 55 years | Female |
As you are aware that the present AB Aryogyadhan policy covering the above members is due for renewal on the 8th June, 2005. Hence, we request you to confirm the renewal coverage required for a further period of one year starting from 9th June, 2005 till 8th June, 2006. You are requested to approach Manager, Andhra Bank with this letter to renew policy. Kindly submit renewal authorization letter (please refer to overleaf) to Branch Manager, Andhra Bank to renew policy.”
10) There was a categorical mention that ‘one month waiting period is waived off and the mediclaim coverage starts from the day one of premium payment provided existing policy is in force for at least one month. The first year standard exclusions get waived off and the members get covered for the same from the day of the renewal as soon as you complete 365 days under policy coverage.’ Pursuant to this the complainants had paid the premium on 3.6.2005 vide Ex. A6.
11) R1 bank through their letter Ex. A5 dt. 23.8.2005 informed the R2 insurance company mentioning “ We wish to inform that we have received renewal premium from some of our valued customers within the stipulated time i.e., 08.06.2005, but we have remitted the same on 30.6.2005 due to under unavoidable circumstances. We request your good selves to consider the premium as renewal of AB Arogyadaan those who have paid the premium within the stipulated time. It seems that there are some other policy holders who had paid the premium beyond the stipulated period and therefore they have mentioned that as far as complainants are concerned they have paid the premium within the stipulated time and their case be considered as renewal of policy within the stipulated time. In regard to others it may consider them as fresh policy as they have paid the premium after the stipulated time.
12) On 27.7.2005 second complainant (wife) was admitted in Cure Emergency Hospital, Critical Care & Trauma Centre at Khammam and was discharged on 2.8.2005. She claimed that after taking permission form the insurance company which had addressed a letter authorising the hospital to treat complainant No. 2 Smt. B. Rukminamma for severe anaemia and guaranteed payment up to Rs. 10,000/- vide Ex. A9 dt. 28.7.2005. When she admittedly spent Rs. 12,593/- evidenced under Ex. A8 and when claim was made it was repudiated on the ground that the claim falls under 30 days waiting period given under the policy.
13) When the first complainant approached L.V. Prasad Eye institute for his cataract eye evidenced under Ex. A4 where they quoted the approximate expenditure at Rs. 21,000/-. When he sought cashless facility of above treatment, by its letter Ex. A3 dt. 18.8.2005 the insurance company refused to extend the facility on the ground that the ‘cashless facility is denied, since treatment of cataract is a first year exclusion under the members mediclaim policy’.
14) From this it is more than clear that the insurance company had treated the policy not as a renewal but as a fresh policy despite the bank itself has admitted that the complainants had paid the renewal premium within the time stipulated. If there is any deficiency or negligent it was R1 bank which belatedly remitted the amount. Obviously, the insurance company knew full well that the complainant had paid the renewal premium as desired by them under Ex. A25. In the light of letter by the bank clarifying that the case of the complainant should be treated as renewal of the earlier policy vide Ex. A5, the question is whether the complainants are entitled to the benefits on payment of amount within the stipulated period and entitled to renew as of a right. If it is construed that it is within the stipulated time, repudiation on the ground that it fell into waiver period is obviously unjust and they cannot construe it as a fresh policy. We may state that for no fault of the complainants they should be penalized.
15) There is a tie up between the R1 bank and R2 insurance company in regard to AB Arogyadhan Mediclaim policy. When the insurance company had directed the complainants to pay the renewal premium at Andhra Bank on or before 8.6.2005, the moment the complainants paid the amount, the renewal was automatic. If there is dispute between the bank and the insurance company it was for them to sort out, and on that score the benefits accrued to the policyholders viz., the complainants could not be denied. The complainants are entitled for hospitalization charges as well as treatment charges as agreed upon by them for complainant No. 2 at least Rs. 10,000/- under Ex. A9. They had committed to pay the said amount in the letter Ex. A9, by virtue of which the complainant No. 2 was given treatment. Though she incurred Rs. 12,593/- vide Ex. A8 in the light of Ex. A9, she would be entitled to Rs. 10,000/- out of the said amount.
16) In regard to the cashless facility to be extended to complainant No. 1 for getting cataract operation performed, it had to pay approximate expenditure of Rs. 21,000/- as assessed by L.V. Prasad Eye Institute, Hyderabad vide Ex. A4. There is no basis for the insurance company to reduce the amount. At any rate, no evidence is filed to show that complainant No. 1 is not entitled to the amount as assessed by L.V. Prasad Eye Institute. In fact by virtue of terms of the policy the insurance company is liable to extend cashless facility in view of the fact that it was a renewal and it is beyond 12 months from the date of taking of the policy. They were entitled for the benefit and entitled to the amount claimed. Treating it as a new policy is ex-facie illegal, obviously they intend to deny it.
17) The Hon’ble Supreme Court in Delhi Electric Supply Undertaking Vs. Basanti Devi reported in AIR 2000 SC 43 considering the salary savings scheme of LIC and agreement between employer and LIC, the premium payable by employer is to be deducted every month from salary of employee and to be remitted to LIC and any delay or negligence on the part of the employer it was held that the insurance company is liable to pay the amount equivalent to the insurance policy of the employee. The decision reiterates that the employer was also guilty of non-deduction of premium from out of the salary ordered to pay half of the amount as costs for not remitting the amount of policy.
11. It was held that “ In the present case we are not concerned with the insurance agent. It is not the case of the LIC that DESU could be permitted as an insurance agent within the meaning of the Insurance Act and the Regulations. DESU is not procuring or soliciting any business for the LIC. DESU is certainly not an insurance agent within the meaning of aforesaid Insurance Act and the Regulations but DESU is certainly an agent as defined in Section 182 of the Contract Act. Mode of collection of premium has been indicated in the scheme itself and employer has been assigned the role of collecting premium and remitting the same to LIC. As far as employee as such is concerned, employer will be agent of the LIC. It is a matter of common knowledge that Insurance Companies employs agents. When there is no insurance agent as defined in Regulations in the Regulations and the Insurance Act, general principles of the law of agency as contained in the Contract Act are to be applied.
12. Agent in Section 182 means a person employed to do any act for another, or to represent other in dealings with third person and the person for whom such act is done, or who is so represented, is called the principal. Under Section 185 no consideration is necessary to create an agency. As far as Bhim Singh is concerned, there was no obligation cast on him to pay premium direct to LIC. Under the agreement between LIC and DESU, premium was payable to DESU who was to deduct every month from the salary of Bhim Singh and to transmit the same to LIC. DESU had, therefore, implied authority to collect premium from Bhim Singh on behalf of LIC. There was, thus, valid payment of premium by Bhim Singh. Authority of DESU to collect premium on behalf of LIC is implied. In any case, DESU had ostensible authority to collect premium from Bhim Singh on behalf of LIC. So far as Bhim Singh is concerned DESU was agent of LIC to collect premium on its behalf.
18) Coming to the facts neither the insurance company nor the bank had filed the terms of their contract. By virtue of terms of the policy the policyholders will be indemnified towards hospitalization expenses (in patient only) incurred due to illness/accident subject to terms, conditions and exclusion of the policy. In clause-3 they made a mention that they are entitled to cashless facility pertaining to the treatment in the network hospitals and also equally at non-network hospitals. When the insurance company had agreed to treat the deposit at Andhra Bank as sufficient compliance for payment of amount towards renewal, as soon as the complainants had paid the amount they are entitled to the benefits. Stipulation of insurance company was to deposit the amount with Andhra Bank by 8.6.2005. The complainants had deposited the amount as directed. The contract is ended. Even in a hypothetical case where the deposit is made before closing hours of the bank, the insurance company would not receive the amount on the said day. It is between the bank and the insurance company to chalk out as to the accounting in regard to payment made by the assured. When the complainants had complied the said stipulation, the insurance company has no right to construe the policy as fresh.
Non-renewal of the policy could be termed as deficiency in service. The insurance company is bound to extend the facility or pay the amount as requested by the complainants. It is for the insurance company to take whatever action that could be taken against the bank in cases of this nature. However, on that score the complainants cannot be denied the benefits.
19) In the result the appeal is allowed consequently the complaint is allowed in part directing R2 insurance company to pay Rs. 10,000/- towards treatment expenses of complainant No. 2 as agreed by it and extend cashless benefit to complainant No. 1 or in the alternative pay Rs. 21,000/- as assessed by L.V. Prasad Eye Institute. The complainants are entitled to a compensation of Rs. 10,000/- for unjust repudiation causing mental agony and Rs. 5,000/- towards costs payable by R1 & R2 jointly and severally. Time for compliance four weeks.
1) _______________________________
PRESIDENT
2) ________________________________
MEMBER
Dt. 19. 08. 2010.
*pnr
“UP LOAD – O.K.”
