1. The Court: This appeal under Clause 15 of the Letters Patent is directed against judgment dated 30th July, 1997 passed by the learned single Judge of this court whereby a direction was issued by the learned single Judge to the appellants to renew the medlclalm policy of the respondent-writ-petitioner. The writ application was allowed with costs assessed at 200 Cms.
2. The respondents, Blman Krishna Bose had taken out a mediclaim insurance policy with the appellant, United India Insurance Company at the relevant time. The dispute between the parties arose because of the refusal of the appellants to renew the said medlclaim policy, despite a clause specifically providing for the renewal in the then existing and subsisting policy. The respondent approached this court by filing writ application under Article 226 of the Constitution of India complaining that the act of the appellants in refusing the renewal was arbitrary and subjective and that because of such refusal the respondent was to suffer loss and injury. After considering all relevant aspects of the case the learned single Judge allowed the writ application in the terms Indicated herelnabove.
3. We have heard the arguments of Mr. Banerjee appearing for the appellant extensively on the question as to whether an obligation Is cast upon the appellants to renew the mediclalm insurance policy as far as the respondent is concerned. Mr. Banerjee very vehemently submitted before us that an option is always available to the appellants, being one of the prospective contracting parties in a contract of Insurance to refuse an offer of entering into the contract in so far as the renewal if a policy is concerned, or for that purpose even the purpose of Issuance of a fresh Insurance Policy, We do not agree with the stand taken by the appellants and for the reasons given below.
4. Under section 9 of the General Insurance Business (Nationalisation) Act 1972 General Insurance Corporation of Iridla (GIC was set up as a Government Company for the purpose of superintending, controlling 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 of carrying on general Insurances business in India. Under section 3(a) 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.
5. It is thus seen that after 1972 when the aforesaid Act came into force only the acquiring Companies had the exclusive privilege of conducting andcarrying on the general Insurance business in India, under the overall supervision and control of GIG.
6. The appellant before us. United India Insurance Co. is one of such acquiring Companies. The legal position which thus emerges is that it is only the acquiring companies which have an exclusive right and privilege to cany on General Insurance business and to that extent we can safely say that the acquiring companies have a monopoly over such business.
7. Can they therefore refuse to enter into a contract of insurance with any person on arbitrary or extraneous considerations having no nexus with the object of refusal to enter into such a contract and, that too without assigning any reason, much less in the absence of any congent and plausible explanation
8. As we have observed earlier, the appellant has the trappings of a State, being an 'authority' under the purview of Article 12 of the Constitution of India. Apart from the concept of monopoly business therefore being conducted by the appellant, it has also to be considered whether the appellant being a State can be allowed to act arbitrarily, whimsically and without any rationale or logic. Article 14 of the Constitution of India being squarely applicable to the appellant, the appellant's conduct even in the matter of issuance or renewal of an Insurance Policy has to be tested on the touch-stone of Article 14 and if the court ever finds that the action is arbitrary, unsupported by reasoning, logic or fair-play and is based on considerations other than merit, the court will have no hesitation In striking down such an action as being violatlve of Article 14.
9. In the light of the aforesaid legal and Constitutional provisions therefore and, upon consideration of the explanation rendered by the appellant before us that the reasoning for refusal to renew the policy was the past conduct of the Respondent, we must admit, such past conduct shall bear close scrutiny by us to find out whether it has any nexus with the object of refusal to renew the policy.
10. This thus brings us to the question as to whether the appellant-company can be compelled to enter into a contract of insurance with a person, even though it does not want to do so. We have no hesitation in saying that the refusal to enter into such a contract of insurance by the appellant company has to be based on objective criteria and reasonableness and the appellant company cannot be permitted to say that it can refuse to enter Into a contract of Insurance on its whims and at its absolute discretion, without assigning any reason, or even for that matter in the total absence of any reason whatsoever. In the present case, while we examined the affidavit-in-opposition filed by the appellants in answer to the writ application before the learned single Judge, we find that the only defence or refusal to renew mediclaim policy came to be mentioned in paragraph 6 of the affidavit-in-opposition, which reads thus-
'With reference to paragraph 3 of the said petition I say that the respondent No. 1 in view of the past conduct of the petitioner decided not to renew the said policy. I say that it is not obligatory on the part of the respondent No. 1 to give any reason for refusing in renew a policy.'
11. This is the only defence taken by the appellants in refusing the renewal. No other defence whatsoever has been taken by them. Thus the only ground taken by the appellants was that they refused to renew medlclalm policy, in view of the past conduct of the petitioner. What was this 'past conduct', how was It relevant to the refused to renew and what was the nature of such relevancy are factors which have not at all been disclosed or plained by the appellants. During the course of hearing both before the learned single Judge in the writ application and before us in this appeal It was suggested by the appellant that the aforesaid 'past conduct', even though not spelt out In the Affldavit-ln-Opposition actually related to the act of the respondent In approaching a court of law for lodging a claim which was earlier rejected or disputed by the appellants. It is admitted by the parties before us, as was also found by the learned single Judge that upon refusal by the appellants, the respondent had approached the Consumer Redressal Forum in respect of his claim arising out of a subsisting mediclalm policy and the respondent was in fact awarded such a claim by the Commission which has been upheld even by the Supreme Court. The question which therefore requires our consideration is whether by his act of seeking remedy in a court of law in respect of a rejected claim, the claimant disentitles himself for the renewal of the insurance policy for the next year or the succeeding years thereafter. Would such an act of an insured in trying to establish his right respecting such claim in a court of law amount to a conduct, may a misconduct which would be a ground for the Insurance Company to refuse the renewal of a policy In future? The related question which may also emerge for consideration is, whether an insured under a policy of Insurance Is prevented to approach a court of law If his claim for compensation arising out of the policy is rejected or refused by the Insurance Company? Does the insured violate any terms and conditions of the contract of insurance by approaching a court of law for such an action, consequently thus Incurring a disability for the renewal of the policy in future? All such questions to our mind deserve only one answer, and the answer is an emphatic No. There Is absolutely no doubt that it Is not permissible for an Insurance Company to refuse the renewal of a policy on such a ground. The only right which the Insurance Company has after It receives a claim from an Insured under a policy of Insurance, genuine or otherwise, Is to examine the claim and then to either allow or refuse the same, depending upon the merit of the claim. If after such a refusal the Insured feeling aggrieved seeks the remedy available to him under law by approaching in a competent court of Jurisdiction, he does not commit any act of misconduct which may debar him from obtaining renewal of a policy In future. If a person takes out an Insurance Policy, he has every right to lodge a claim arising out of such a policy and if, for a tenable reason or otherwise, the Insurance-company refuses to entertain, accept or allow such a claim, the Insured has a right of approaching a Court of Law for establishing his claim and to claim relief thereupon. The appellants were wholly unjustified In refusing to renew the policy on this ground. The act of the appellants in such refusal was absolutely arbitrary and totally subjective, based on considerations which were neither genuine nor had any nexus to the refusal as such.
12. We are clearly of the view that the learned single Judge was wholly Justified in directing the appellants to renew the mediclaim policy of the respondent.
13. Between the date of the judgment of the learned single Judge and today, enough time has elapsed. We have nodoubt that a contract of Insurance cannot be related back to a period of time. It cannot be retrospective, A contract of Insurance cannot operate in the past. It has to operate In future.
In that view of the matter, therefore, we cannot Issue any direction with regard to the renewal of the policy for any period prior to today. However, in view of the judgment of the learned single Judge and the stand that we have taken In this appeal, we are also clearly of the view that hereafter, year after year, the respondent shall he entitled to ask the appellants for Issuance of a fresh Mediclalm policy and if he does so, the appellants shall be under a clear and binding obligation to enter into such a contract of insurance with him and issue such a policy to him, depending upon the premium to be paid by the respondent and also subject to the condition that the respondent does not suffer from any specific/specified disability for entering Into such a contract. When we talk about and refer to such a disability, we mean only such specific and specified disability which is recognised under law and which alone under law can form the basis for the respondent being prevented from entering Into such a contract of insurance.
14. With the aforesaid observations and directions the appeal Is dismissed with costs throughout, Including the costs awarded by the learned single Judge, assessed at 500 Cms.
15. All parties are to act on a signed xerox copy of this dictated order on the usual undertaking.
16. Appeal dismissed, with court