2012 10 1501 32101 Judgement 09-Dec-2021
2012 10 1501 32101 Judgement 09-Dec-2021
2012 10 1501 32101 Judgement 09-Dec-2021
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6778 OF 2013
JACOB PUNNEN & ANR. …APPELLANT(S)
VERSUS
UNITED INDIA INSURANCE CO. LTD. ...RESPONDENT(S)
J U D G M E N T
S. RAVINDRA BHAT, J.
2. The undisputed facts are that the appellants contracted with the
1982. The policy was annual and was renewed successively, each year by the
appellants by paying the appropriate premium - the last renewal policy forming
the subject matter of the present appeal. The policy renewed by the appellants
Signature Not Verified
on 28.03.2007 was in force for a year i.e., till 27.03.2008. Before the date of
Digitally signed by
Nidhi Ahuja
Date: 2021.12.09
18:25:21 IST
Reason:
expiry of the Mediclaim (on 27.03.2008), the insurer sent a reminder to the
1Order dated 11.07.2012 in Revision Petition No.2743 of 2011.
2
appellants to renew their policy, if they so wished, annually. The reminder also
intimated the appellants that the premium was ₹17,705/- and had to be paid by
26.03.2008) and in this regard the receipt was received from the insurer on
30.03.2008. This receipt indicated that the insurance policy period would be
was ₹ 8,00,000/- (₹ 4,25,000/- for the first appellant and ₹ 3,75,000/- for the
policy, towards the expenses incurred by them. The insurer, however, accepted
the claim and paid the partial amount by releasing ₹ 2,00,000/- to them.
and unavailingly to the insurer to make good the balance amount. Exhausted,
the appellants filed a complaint before the District Consumer Disputes Redressal
Forum (hereafter “the District Forum”), Kottayam for a direction that the insurer
ought to pay them ₹ 2,07,705/- along with costs and interests on the
compensation.
4. The insurer’s position before the District Forum was that the terms and
conditions of Mediclaim policy changed periodically. The policy for the relevant
policy limit could be claimed subject to an overall limit of ₹ 2,00,000/- for any
3
one surgery or procedure. The insurer also argued that having been issued with
the policy document which was accepted by the appellants, the latter could not
then complain that they were any amounts over and above the terms agreed
upon.
5. The District Forum allowed the appellants’ complaint holding firstly that
like any other agreement, on its own terms subject to fulfillment of the
conditions of uberrima fides i.e., utmost good faith by the parties and secondly
that the insurer was under a duty to intimate to be insured with respect to
change in terms before the renewal of the policy. On the basis of these findings,
the District Forum directed the insurer to pay the appellants,₹ 1,75,000/- as the
order upset the findings of the Consumer Forum, holding that the terms of the
policy were known to the appellants who were bound by it. In these
The NCDRC upheld the insurer’s contention that the insurance policy renewed
by the appellants on 28.03.2008 was a fresh contract entered into between the
parties which reflected changes compared with the previous terms. These
conditions – the NCDRC held – were known to the appellants or were presumed
to be known since they had claimed under that policy and that it was not open to
4
them to claim ignorance of the terms under the fresh policy which had placed
6. It is argued by the counsel for the appellants Ms. Arundhati Katju that the
State Forum and the NCDRC fell into error in holding that the appellants were
aware and were deemed to have been aware of the terms of the policy. It was
emphasized that the appellants had not applied and obtained a fresh policy but
had rather renewed an existing policy – as they did earlier from time to time
Co. Ltd.2, and United India Insurance Co. Ltd. v. Manubhai Dharmasinhbhai
Gajera3, it was argued that the renewal of an insurance policy would imply that
the existing terms would bind the parties. As a consequence, the insurer being a
party cannot impose unilateral changes, either at the point of time when the
7. Learned counsel compared the terms of the previous policy (which had
covered the period March 2007-March 2008) with the policy in question (for the
period March 2008 to March 2009) and submitted that the overall limit of
was also stated that the previous policy covered health risks of three individuals
i.e., the appellants and their son whereas the policy in question covered only the
circumstances, it was duty of the insurer to inform the insured of the likely
policy that would cover all risks more comprehensively, even if it were to cost
them more. Counsel urged that in these circumstances, the insurer was clearly
guilty of deficiency of service in as much as the insurer was in the dark about
8. Learned counsel on behalf of the insurer Mr. Amit Kumar urged this court
to uphold the finding of the NCDRC submitting that there was no deficiency in
service by the respondents. It was submitted that the appellants never disputed
that in fact the policy was dispatched pursuant to the renewal. A careful reading
of the policy for the year 2008-2009 would have indicated that it differed
radically from the policy from the previous year because of a term indicating a
circumstances, the appellants could not place any blame upon the insurer.
intimidate to the appellants about the likely changes under its policies. In other
words, there was no duty in law which obliged the insurer to intimate the policy
holder – at the point of time of renewal that the terms of the new policy would
that the term “renewal” has no special significance given that the contract of
insurance i.e., policy in this case is the first annual one. Therefore, the policy
for 2008-09 is a different contract of insurance from the one which preceded it.
6
Learned counsel submitted that the very circumstance that a higher coverage
insured under the previous policy showed that the insurer had complied with the
10. Learned counsel for the insurer brought to the notice of this Court that the
obligation of intimating the insured, has been spelt out in the Standardized
submitted that the obligation to intimate stems out of Clause 14 which deals
with the possibility of revision of terms of a policy including the premium rates.
This clearly indicates that only the existing policy holder has to be notified.
However, in renewal of same policy does not place any such obligation upon the
11. It was urged furthermore that the monetary cap of ₹2,00,000/- in the
present case was not conjured by the insurer, which merely complied the
IRDA’s directions. In this regard, the learned counsel submitted that insurer
acted upon the IRDA’s direction, which were communicated to its offices and
the point of time of renewal, no implied obligation on the part of the insurer can
other words, it is up to the insured to inquire, if the terms of the renewed policy
12. The previous policy4 indicated a limit of ₹3 lakhs each for the appellants,
and ₹ 1 lakh cover to Ajay Punnen Jacob (their son). The policy in question,
i.e., for 2008-09 covered an overall limit of ₹8 lakhs (₹ 4,25,000/- for the first
appellant and ₹ 3,75,000/- for the second appellant, his wife). A copy of the
policy which has been produced indicates that the premium (including service
tax) paid was ₹17,705/. The period of insurance was from 00.00 hrs of
“1.2 In the event of any claim(s) becoming admissible under this scheme,
the company will pay through TPA to the Hospital/Nursing Home or the
insured person the amount of such expenses as would fall under different
heads mentioned below, and as are reasonably and necessarily incurred
thereof by or on behalf of such Insured Person, but not exceeding the Sum
Insured in aggregate mentioned in the schedule hereto.
13. In the previous policy5 the stipulation, limiting for medical expenditure
“1 In the event of any claim/s becoming admissible under this scheme, the
company will pay through TPA to the Hospital/Nursing Home or the insured
person the amount of such expenses as would fall under different heads
mentioned below, and as are reasonably and necessarily incurred thereof by
or on behalf of such Insured Person, but not exceeding the Sum Insured in
aggregate mentioned in the schedule herein.
A) Room, Boarding Expenses as provided by the Hospital/ nursing home
B) Nursing Expenses
C) Surgeon, Anesthetist, Medical Practitioner, Consultants, Specialists Fees
D) Anesthesia, Blood, Oxygen, Operation Theatre Charges, surgical
appliances, Medicines & Drugs, Diagnostic Materials and X-ray
E) Dialysis, Chemotherapy, Radiotherapy, Cost of Pacemaker, Artificial
Limbs & Cost of organs and similar expenses.
(N.B: Company's Liability in respect of all claims admitted during the period
of insurance shall not exceed the Sum Insured
per person as mentioned in the schedule)”
14. What is apparent from the record is that upon receipt of the renewed
26.03.2008 which was duly received. That the cheque was encashed and a
policy document issued by the insurer is not in dispute. Both parties, i.e., the
first appellant and the Divisional Manager of the insurer have filed affidavits in
when the policy document was actually despatched and received by the insurer
and on which date it was received by the appellants. Clearly, the policy
containing the fresh terms was issued after receipt of the premium for the year
2008-09. In this regard, interestingly, the affidavit evidence of the insurer states
as follows:
5 For 2006-2007
9
15. The insurer’s counsel had, during the course of the hearing, relied upon a
document titled ‘Guidelines on Standardization of General Terms and Clauses
in Health Insurance Policy Contracts’ dated 11.06.2020 highlighting clauses 10
and 14 of the document. They are extracted below:
“10 Renewal of Policy
The policy shall ordinarily be renewable except on grounds of fraud,
misrepresentation by the insured person.
i. The Company shall endeavor to give notice for renewal. However, the
Company is not under obligation to give any notice for renewal.
ii. Renewal shall not be denied on the ground that the insured person had
made a claim or claims in the preceding policy years.
iii. Request for renewal along with requisite premium shall be received by the
Company before the end of the policy period.
iv. At the end of the policy period, the policy shall terminate and can be
renewed within the Grace Period of ...... days (Note to insurers: Insurer to
specify grace period as per product design) to maintain continuity of benefits
without break in policy.
Coverage is not available during the grace period.
V. No loading shall apply on renewals based on individual claims experience”
The insurer had also relied upon a copy of the United India Insurance Company
Existing Policyholders who are below the age of 35 years as on the date of
introduction of this Product will be allowed to renew the Policy as Platinum.
All other Policyholders will be brought under the Gold Policy.
An entrant into the Platinum Policy will be allowed to continue under the
Policy even after he crosses 35 years. As on date the table is available upto
the age of 45 years. This will be expanded based on the claims experience of
the next two years.
In respect of Senior Citizens who are our existing policyholders, they will be
allowed to renew the policy on existing terms and conditions but at revised
rates of premium under Gold Policy. They should not be compelled to migrate
to the new Scheme. If they so desire to enter the new Scheme, the same may
be allowed on collection of fresh proposal.
Persons above the age of 60 years and taking a Health Policy for the first
time can be granted the Senior Citizens Policy only.”
Analysis:-
16. In the facts of the present appeal, the insurer insisted that the 2008-09
‘Gold’ policy was in fact a ‘new’ one, and not a renewal, which was available
with the appellants, before the second appellant’s surgery took place. There is
some dispute on this aspect; the appellants contended that the amended terms of
the 2008-09 Gold policy were received only after three months of the payment
of the renewal premium, and thus there was no scope for them to have read and
given consent to the cap on angioplasty coverage in the new Gold policy.
17. The insurer had placed reliance on the administrative guidelines (supra)
Gold policy was a new insurance product, and not a renewal of the previous
Mediclaim policy. However, the same clause stated that, “In respect of senior
citizens who are our existing policy holders, they will be allowed to renew the
policy on existing terms and conditions but at revised rates of premium under
Gold policy”. The clause further stated that, “They should not be compelled to
migrate to the new (Gold) scheme. If they so desire to enter the new scheme, the
introduction of the cap on the coverage by the insurer, as the appellants were not
informed that they had paid premium for a new policy, but were led to believe
that they had in fact renewed a pre-existing policy on the same terms, with only
difference being the removal of their son as a beneficiary and a higher coverage
(from Rupees 6 lakhs to Rupees 8 lakhs in total) for the appellants, which was
by the assured involves unconditional acceptance of all the terms. 6 Thus the cap
on the coverage placed by the insurer without prior intimation to the assured
policies that were more favourable to their needs was restrictive, and thus not
enforceable.
19. In these circumstances, this Court is of the opinion that the eventuality
in the cases of renewal, when the contracts provide “or otherwise”, has to be
However, that would not be the case when a new term is introduced unilaterally
about which the policy holder is in the dark. Further, the allusion to continuation
of the terms of the Gold policy in respect of senior citizens (who were not to be
terms, upon payment of a different rate of premia, reinforces the conclusion that
20. Arguendo, assuming the appellants had received the policy documents on
time, i.e., requisite disclosure had been made, and then the appellants had in fact
misunderstood the terms and mistaken the new Gold policy for the previous
policy, the question is, post payment of premium, were they in a position to
the policy, could complain about mistake in its terms, and the possible
21. There cannot be any gainsaying to the fact that if parties are not agreed on
the terms, one of the likely results would be its avoidance. “Mistake” is not
defined, under the Contract Act, 1872; however, Section 22 of the Act7 enacts
7 Extracted below:
13
that a unilateral mistake of fact, does not result in its nullity. The general law on
What is a “material fact” was explained in Satwant Kaur Sandhu v. New India
“The term “material fact” is not defined in the Act and, therefore, it has been
understood and explained by the courts in general terms to mean as any fact
which would influence the judgment of a prudent insurer in fixing the
premium or determining whether he would like to accept the risk. Any fact
which goes to the root of the contract of insurance and has a bearing on the
risk involved would be “material”. [Para 22].
22. In Tarsem Singh v. Sukhminder Singh10, this court clarified that a
unilateral mistake would not render a contract void under Indian contract law:
“Section 22. Contract caused by mistake of one party as to matter of fact.—A contract is not voidable
merely because it was caused by one of the parties to it being under a mistake as to a matter of fact. —A
contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a
matter of fact."
8(2020) 3 SCC 455
9(2009) 8 SCC 316
10(1998) 3 SCC 471
14
treated as void, both the parties must be shown to be suffering from mistake of
fact. Unilateral mistake is outside the scope of this section."
[emphasis supplied]
Therefore, the law in India is that unless the unilateral mistake about the terms
not result in automatic avoidance of a contract. Applied to the facts of this case,
it is evident that the appellants could insist on the old insurance policy, on the
premise that it renewed the pre-existing policy. The other conclusion would be
cold comfort to the party seeking insurance cover, as the choice would be to
what are the duties of an insurer, when a policy holder seeks renewal of an
existing policy. The insurer here contends that the consumer was under an
obligation to inquire about the terms of the policy, and any changes that might
have been introduced, in the standard terms. It was urged that the appellants, in
the facts of this case, should have inquired from the concerned agent; since they
24. A striking feature of insurance law, is the principle of uberrima fide (duty
of utmost good faith) which applies to both the insured as well as one who seeks
indemnity and cover. In United India Insurance Co. Ltd. v. M.K.J. Corpn.11 this
court underlined the importance of this principle, and its application to the
"It is a fundamental principle of Insurance law that utmost good faith must be
observed by the contracting parties. Good faith forbids either party from
concealing (non-disclosure) what he privately knows, to draw the other into a
bargain, from his ignorance of that fact and his believing the contrary. Just as
the insured has a duty to disclose, similarly, it is the duty of the insurers and
their agents to disclose all material facts within their knowledge, since
obligation of good faith applies to them equally with the assured. The duty of
good faith is of a continuing nature. After the completion of the contract, no
material alteration can be made in its terms except by mutual consent. The
materiality of a fact is judged by the circumstances existing at the time when
the contract is concluded."
Other decisions too have expressed the same view. 12 In Modern Insulators Ltd.
v Oriental Insurance Co. Ltd13 this court observed that:
"It is the fundamental principle of insurance law that utmost good faith must
be observed by the contracting parties and good faith forbids either party
from non-disclosure of the facts which the parties know. The insured has a
duty to disclose and similarly it is the duty of the insurance company and its
agents to disclose all material facts in their knowledge since the obligation of
good faith applies to both equally."
(the insurer) to notify the other, about a material change in the terms, at the
The insured invested in two individual unit-linked life insurance contracts with
enhance the tax efficient growth of a capital assurance plan. At the relevant
time, the insured were living in both Wales and Spain and were British
12Reliance Life Insurance Co. Ltd. vs Rekhaben Nareshbhai Rathod 2019 (6) SCC 175; Life Insurance
Corporation of India vs Asha Goel 2001 (2) SCC 160; P.C. Chacko vs Chairman, Life Insurance Corporation of
India 2008 (1) SCC 321 and Satwant Kaur Sandhu vs New India Assurance Company Limited 2009 (8) SCC
316
132000 (2) SCC 734
14[2012] 2 All ER (Comm) 725; SA [2012] EWCA Civ 88
16
wrong”; when they sued Nordea in England, the company argued that there was
and claimed that proper jurisdiction were courts in Spain, or Luxembourg. The
for England, for Luxembourg, and for Spain. The plaintiff-insured, however,
as the country of their habitual residence at the time of contract, and that that
agreement was never displaced. The Court of Appeal rejected the insurer’s
of the Member State of the commitment". If, however, there had been no prior
agreement on English law and jurisdiction, then I think that a straightforward
proposal, in writing, which the insured was asked to read carefully, as the
Sherdleys were asked to read Nordea's proposal, before indicating their
consent on a proposal acceptance form, would satisfy the requirements of
article 23.”
26. In view of the state of law, which is, that the insurer was under a duty to
disclose any alteration in the terms of the contract of insurance, at the formation
stage (or as in this case, at the stage of renewal), the respondent cannot be heard
to now say that the insured were under an obligation to satisfy themselves, if a
new term had been introduced. If one considers the facts of this case, it is
evident that the insurer had caused a renewal reminder, which was acted upon
and the renewal cheque, issued by the appellant. At that stage, or just before the
renewal premium was furnished the insurer, or its agent was under a duty to
alert the appellants that the change in terms, was likely to impact their decision,
two circumstances here. The first, is that medical or health insurance cover
becomes crucial with advancing age; the policy holder is more likely to need
insured may, if advised properly, and in a position to afford it, seek greater
coverage, or seek a different kind of policy. The second, is that most policies –
health and medical insurance policies being no exception, are in standard form.
It would be worthwhile to notice at this stage that one who seeks coverage of a
life policy/a personal risk, such as accident or health policy has little choice but
18
to accept the offer of certain standard term contracts – which are termed as
27. The Law Commission16 has addressed this issue in the report titled
while deciding a consumer dispute, this Court applied the principle that unfair
Raghavan18. It was held that a term introduced in a standard form contract can
“A term of a contract will not be final and binding if it is shown that the flat
purchasers had no option but to sign on the dotted line, on a contract framed
by the builder. The contractual terms of the Agreement dated 08.05.2012 are
ex-facie one-sided, unfair, and unreasonable. The incorporation of such one-
sided clauses in an agreement constitutes an unfair trade practice as per
Section 2 (r) of the Consumer Protection Act, 1986 since it adopts unfair
methods or practices for the purpose of selling the flats by the Builder.”
discussed previously, leave little or no choice to the customer; in this case, the
policy holders were left with no room to bargain and negotiate. In the present
case, the standard form contract, renewed year after year, left the appellants
only with the choice of raising the insurance cover. The last renewal, of course,
resulted in the deletion of their son as a beneficiary. However, even with this
little choice, the result of their being kept in the dark about the new terms which
placed limits on individual surgical procedures meant that had any other
information with respect to the increased coverage which could have resulted in
the higher individual limits (for surgical procedures) from they might have
(vii) gives to the public any warranty or guarantee of the performance, efficacy or length of life of a
product or of any goods that is not based on an adequate or proper test thereof:…”
20
benefitted was denied to them. For that reason, the “informational blackout”, so
30. During the hearings, it was urged on behalf of the insurer that the agent
would have ordinarily informed the policy holder as she or he was in touch with
them. The insurer did not lead evidence in this regard. Its agent was not asked to
affirm any affidavit. In these circumstances, the inference to be drawn is that the
agent did not inform – at the time of renewal of the policy, in 2008, about the
limits in regard to coverage of individual procedures but also omitted them any
payment of higher premium which might have resulted in a higher limit for the
31. There is no doubt that insurance business is run through brokers and
agents. The role of an agent in this regard is to be examined. This Court has
spelt out, in the context of insurance business the role of insurance agents and
discharge the duties cast upon agents, and the likely vicarious responsibility or
Life Insurance Corporation, had floated a ‘Salary Savings Scheme’ in which the
employer deducted premium from its employees’ salaries and paid them to LIC
on the employees’ behalf. The premium for a period of time was not deducted
representatives claimed the insured amount. LIC rejected the claim on the
grounds of lapse of the policy due to non-payment of premium, and that the
actions of the employer did not bind LIC given that it was not an ‘agent’ of LIC.
“11. In the present case we are not concerned with the insurance agent. It is
not the case of 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 LIC. DESU is certainly not an
insurance agent within the meaning of the aforesaid Insurance Act and the
regulations but DESU is certainly an agent as defined in Section 182 of the
Contract Act. The mode of collection of premium has been indicated in the
Scheme itself and the employer has been assigned the role of collecting
premium and remitting the same to LIC. As far as the employee as such is
concerned, the employer will be an agent of LIC. It is a matter of common
knowledge that insurance companies employ agents. When there is no
insurance agent as defined in the regulations and the Insurance Act, the
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 another in dealings with third persons 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. The 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 an agent of LIC to collect
premium on its behalf.”
Rajiv Kumar Bhaskar21. It would be useful, in the present context to extract the
relevant terms of the notification, 22[especially Clauses 3 (2) and 4 (1)] issued
by the IRDA:
“3(2) An insurer or its agents or other intermediatory shall provide all material information
in respect of a proposed cover to the prospect to enable the prospect to decide on the best
cover that would be in his or her interest.”
4(1) Except in cases of a marine Insurance cover, where current market practices do not insist
on a written proposal form in all cases, a proposal for grant of a cover, either for life business
or for general business, must be evident by a written document. It is the duty of an insure to
furnish to the insured free of charge, within 30 days of the acceptance of a proposal, a copy of
the proposal form.”
In the present case, even if, for arguments’ sake, one was to accept the
submissions of the insurer which is that their agent should have informed the
appellant policy holders, the absence of any evidence that he did or any
evidence adduced by the insurer that despite information the appellants chose to
accept the policy in the terms which they eventually were furnished, the only
consumer protection law. The Consumer Protection Act, 1986 states the
demonstrate deficiency, it is not necessary that the same emanates only from a
law or a contract. The term “or otherwise” clearly provides for circumstances
35. The special status of senior citizens in general was taken cognizance of
insurance products, with effect from 28.1.2017) which inter alia, stated that
“In respect of Senior Citizens who are our existing policyholders, they will be
allowed to renew the policy on existing terms and conditions but at revised
rates of premium under Gold Policy. They should not be compelled to migrate
to the new Scheme. If they so desire to enter the new Scheme, the same may
be allowed on collection of fresh proposal.”
The insurer’s argument here was that no existing senior citizen policy holder
the Mediclaim holders were kept in the dark, and asked to renew a policy, the
terms of which had undergone a significant change in that its cover was
36. Worldwide, nations are seeking viable answers to the question of how to
offer health care to their citizens. The World Health Organization (WHO)
social well-being and not merely the absence of disease or infirmity. 23 Healthy
living conditions and good quality health is not only a necessary requirement it
Declaration of Human Rights 194824 lays down that everyone has the right to a
standard of living, adequate for the health and well-being of himself and of his
family, including food, clothing, housing and medical care. The International
Covenant on Economic, Social and Cultural Rights, 1976, too recognizes the
In Calcutta Electric Supply Corporation Ltd. v. Subhash Chandra Bose, (1992) 1 SCC 441 this court,
quoting from various international covenants, observed that,
“the term ‘health’ implies more than an absence of sickness. Medical care and
health facilities not only project against sickness but also ensure stable man power for
economic development. Facilities of health and medical care generate devotion and
dedication to give the workers' best, physically as well as mentally in productivity. It enables
the worker to enjoy the fruit of his labour, to keep him physically fit and mentally alert for
leading a successful, economic, social and cultural life. The medical facilities, are therefore,
part of social security and like gilt edged security, it would yield immediate return in the
increased production or at any rate reduce absenteeism on grounds of sickness, etc. health is
thus a state of complete physical, menial and social well-being and nut merely the absence of
disease or infirmity”.
(1) Everyone has the right to a standard of living adequate for the health and well-being of
himself and of his family, including food, clothing, housing and medical care and necessary social services,
and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack
of livelihood in circumstances beyond his control.
(2) Motherhood and childhood are entitled to special care and assistance. All children, whether
born in or t of wedlock, shall enjoy the same social protection.
37. Part IV of the Indian Constitution which contain the Directive Principles
of State Policy imposes duties on the state. Some of its provisions directly or
indirectly are associated with public health. These principles direct the state to
take measures to improve the condition of health care of the people. Articles 38
imposes duty on state that state secure a social order for the promotion of
welfare of the people. Without an overall viable framework of public health, the
relates to workers and enjoins the state to protect their health. Article 41
imposes the duty on the state to public assistance essentially for those who are
sick and disabled. Article 42 casts primary responsibility upon the state to
protect the health of infants and mother through maternity benefit. Article 47
spells out the duty of the state to raise the level of nutrition and standard of
living of its people. Other provisions relating to health fall in this Part of the
38. For a long time, state policy in this country was to involve only public
sector entities in the insurance sector. All this changed, with the opening up of
the economy and entry of private sector insurers. To regulate entities in the
1999 (“the IRDA Act”) was enacted. Its provisions, together with that of the
Insurance Act, 1938, and regulations framed under both enactments, regulate all
26
India. Section 2 (6C) of the Insurance Act defines “health insurance business”
regulating health insurance products contains regulations which are relevant for
the purpose of this case. Chapter III of these regulations contains general
as follows:
Regulation 13 is relevant for the purposes of this appeal; it deals with renewal
39. These regulations only underline expressly what was implicit, i.e., the
insurer’s obligation to inform every policy holder, about any important changes
that would affect her or his choice of product. These have been given statutory
shape. Yet, the obligation of the insurer to provide information to existing and
policy holders, for them to exercise choice, meaningfully, and choose products
suited to their needs, existed. In this case, that obligation was breached.
40. In view of the above discussion, this Court is of the opinion that the
findings of the State Commission and the NCDRC cannot be sustained. The
insurer was clearly under a duty to inform the appellant policy holders about the
limitations which it was imposing in the policy renewed for 2008-2009. Its
impugned order of the NCDRC as well as the order of the State Commission are
28
hereby set aside. The order of the District Forum is accordingly restored.
.....................................................J
[S. RAVINDRA BHAT]
New Delhi,
December 9, 2021
29
REPORTABLE
VERSUS
JUDGMENT
K.M. JOSEPH, J.
separate opinion.
………………………………………………J.
[K.M. JOSEPH]
NEW DELHI;
DATED: December 09, 2021.