PER JUSTICE K.S. CHAUDHARI, PRESIDING MEMBER

These revision petitions arise out of the same order of State Commission; hence, decided by a common order.

2.      These revision petitions have been filed by the petitioners against the order dated 23.07.2013 passed by the Rajasthan State Consumer Disputes Redressal Commission, Jaipur (in short, ‘the State Commission’) in Appeal No. 32 of 2012 – Prem Kishan Garg Vs. United India Ins. Co. Ltd. and Ors. by which, while allowing appeal, order of District Forum dismissing complaint was set aside and complaint was allowed.

3.      Brief facts of the case are that complainant/respondent was an Account holder of Bank of Rajasthan. OP No. 1 & 2/petitioner launched a Group Medi-Claim Insurance Policy of Account holder of Rajasthan Bank.  Complainant got medi-claim insurance policy on 7.4.2008 from OP to the extent of Rs.5,00,000/- after payment of premium of Rs.7315/.  Policy was renewed for the year 2009-2010 and 2010-2011 after paying aforesaid premium amount.  On 29.3.2011, complainant got letter from Insurance Co. whereby complainant was informed by OP No. 3/petitioner that Bank of Rajasthan had merged with OP No. 3 and complainant must send premium by demand draft to OP for continuation of policy.  Complainant sent demand draft of Rs.7181/-, but Insurance Co. vide letter dated 8.4.2011 demanded Rs.26999/- from complainant for renewal of policy which was contrary to previous terms & conditions of the policy.  Alleging deficiency on the part of OPs complainant filed complaint before District Forum.  OP No. 1 & 2 resisted complaint and submitted that there was no privity of contract between OP No. 1 & 2 and OP No. 3.  It was further submitted that as insurance policy was issued to the complainant before date of merger of Bank of Rajasthan and ICICI Bank, OP No. 3 vide letter dated 29.8.2010 terminated agreement between OP and Bank of Rajasthan, so, policy could not be renewed and prayed for dismissal of complaint.  OP No. 3 resisted complaint and submitted that there was no privity of contract between the complainant and OP and complainant is not a consumer of OP and prayed for dismissal of complaint.  Learned District Forum after hearing both the parties dismissed complaint.  Appeal filed by complainant was allowed by learned State Commission vide impugned order and State Commission directed jointly and severally to the OPs to renew medi-claim insurance policy every year till complainant attains age of 85 years after receiving premium of Rs.7181/- and further directed that in case policy is  not issued they have to pay Rs.5,00,000/- and further awarded Rs.50,000/- as compensation for mental agony and cost of proceedings against which, these revision petitions have been filed.

4.      Heard learned Counsel for the parties finally at admission stage and perused record.

5.      Learned Counsel for the petitioner/Insurance Co. submitted that there was no privity of contract between ICICI Bank and Insurance Company and after termination of contract between Insurance Co. and Bank of Rajasthan rightly demanded premium and learned District Forum rightly dismissed complaint; even then, leaned State Commission committed error in allowing appeal; hence, revision petition be allowed.  Learned Counsel for the petitioner/ICICI Bank submitted that there was no privity of contract between the complainant and Bank after merger of Bank of Rajasthan with ICICI Bank and learned District Forum rightly dismissed complaint; even then, leaned State Commission committed error in allowing appeal; hence, revision petition be allowed and impugned order be set aside.  On the other hand, learned Counsel for the respondent submitted that order passed by learned State Commission is in accordance with law; hence, revision petition be dismissed.

6.      Perusal of record reveals that complainant obtained Group medi-claim insurance policy as Account holder of Bank of Rajasthan and in the proposal form which has been signed by complainant it has clearly been mentioned that in case of any claim under the policy, Bank of Rajasthan will not undertake any responsibility and correspondence has to be pursued with Insurance Company.  It was further mentioned that complainant is aware that policy will be renewed based on premium rates, terms and conditions prevailing at the time of renewal.       This clause makes it very clear that Bank of Rajasthan was not liable in any manner whether policy is renewed or not and policy was renewable subject to payment of premium rates prevailing at the time of renewal.

7.      It is not disputed that by scheme of amalgamation, Bank of Rajasthan merged with ICICI bank by order dated 12.8.2010 issued by Reserve Bank of India.  Paragraph 4 (ii) of the Scheme of Amalgamation runs as under:

“Upon the coming into effect of this Scheme pursuant to the provisions of the said Act and RBI Guidelines, subject to the provisions of this Scheme, and on and from one day prior to the Effective Date, notwithstanding any to the contrary contained in any contracts; deeds, documents, agreements, arrangements, other instruments or understandings (oral or otherwise) and in this Scheme, the distribution or referral tie-ups, agencies or marketing or co-marketing arrangements by whatever name called between the Transferor Bank and Aviva Life Insurance Co. Ltd., United India Insurance Co. Ltd., the Export Credit and Guarantee Corporation, IDBI Capital Markets Ltd., Religare Securities Ltd. and Western Union shall terminate and have no effect (other than for the receipt of any amounts, if any, that may be due and payable anytime from such person or entities pertaining to the period prior to termination) without requirement of any further act, instrument or deed and without any cost, compensation or damages being payable by the Transferor Bank or the Transferee Bank to such person or entities or any other person or entities”. 

8.      Perusal of aforesaid clause makes it clear that any arrangements between Bank of Rajasthan and United India Insurance Company shall terminate and have no effect. Thus, it becomes clear that after scheme of amalgamation was notified, previous contracts between Bank of Rajasthan and United India Insurance Co. stood terminated and petitioner/insurance co. was not under any obligation to renew insurance policy on the basis of previous premium amount on which, earlier renewals were made.  In the proposal form itself it has clearly been mentioned that renewal will be subject to premium rates prevailing at the time of renewal meaning thereby renewal was not to be effected on the basis of rate of premium prevailing at the time of grant of original policy, but was subject to renewal on the basis of prevailing premium rate.  Learned State Commission by impugned order directed OP to renew the policy after receiving premium of Rs.7181/- till complainant attains age of 85 years without any basis. Insurance Company cannot be restrained from increasing insurance premium as per provisions of the Act.

9.      After merger of Bank of Rajasthan with ICICI Bank, ICICI Bank vide letter dated 20.8.2010 intimated to United India Insurance Co. that it has no obligation whatsoever under the said memorandum post the effective date except for settlement of accounts Insurance Company vide letter dated 8.4.2011 intimated to the complainant that Bank of Rajasthan has merged with ICICI Bank and Insurance policy issued to complainant cannot be continued due to IRDA regulations.  He was further apprised that his policy can be renewed subject to payment of Rs.26999/-.  I do not find any illegality or irregularity in this letter by which complainant was given an offer to get the policy renewed subject to payment of premium of Rs.26,999/- and learned State Commission committed error in directing OPs to renew policy on initial premium.

10.    Learned State Commission observed in its order that Clause 12 of the agreement executed between the Insurance Co. and Bank of Rajasthan provided that agreement could be terminated/modified/altered after giving advance notice of 3 months before expiry of the insurance policy and no such notice was given by Insurance Company.  As per Scheme of amalgamation, contracts entered between the Bank of Rajasthan and Insurance Company came to an end and complainant was not entitled to get any benefit under Clause 12 of the agreement.  Learned State Commission further observed in paragraph 8 as under:

“….In this regard, it is pertinent to mention here that there is no mention in the scheme of the Group Medi-Claim Insurance Policy for the account holders of the Bank of Rajasthan that the amount of premium shall be increased in case of merger of the Bank of Rajasthan in ICICI Bank….

This observation is apparently fallacious because at the time of taking Group Medi-claim Insurance Policy, there was no occasion to mention that in case Bank of Rajasthan is merged with ICICI Bank, amount of premium will be increased because insurance policy was taken on 7.4.2008 and Bank of Rajasthan merged with ICICI Bank on 12.8.2010.

11.    It was further observed in the impugned order that when Transferee Bank (ICICI Bank) acquires all the properties, assets, etc. of Bank of Rajasthan, ICICI Bank cannot wriggle out from its liability on technical grounds under the garb of IRDA regulations or guidelines of the Reserve Bank of India.  This observation does not find support from scheme of amalgamation because as per scheme of amalgamation all contracts between the Bank of Rajasthan and Insurance Company stood terminated and it there was no question of fastening liability on ICICI Bank on the basis of earlier agreement entered into between the Bank of Rajasthan and Insurance Company.

12.    By impugned order, learned State Commission directed OPs to pay Rs.5,00,000/- in case they do not wish to continue the scheme of Medi-claim Policy which is apparently not proper.  Complainant got Medi-Claim policy for Rs.5,00,000/- subject to payment of premium every year upto the age of 85 years.  By this policy, at the most Insurance Company was liable to pay Rs.5,00,000/- at any time, but not beyond this amount.  By this order, learned State Commission asked the Insurance Company to pay Rs.5,00,000/- even without getting any premium which is prima facie contrary to spirit of insurance policy itself because it was renewable subject to payment of premium.

13.    In the light of above discussion, it becomes clear that learned State Commission committed error in allowing complaint and learned District Forum rightly dismissed complaint and revision petition is to be allowed.

14.    Consequently, revision petitions filed by the petitioners are allowed and impugned order dated 23.07.2013 passed by the Rajasthan State Consumer Disputes Redressal Commission, Jaipur in Appeal No. 32 of 2012 – Prem Kishan Garg Vs. United India Ins. Co. Ltd. Ors. are set aside and complaint stands dismissed with no order as to costs.