JACOB PUNNEN & ANR. versus UNITED INDIA INSURANCE CO. LTD.

Citation: [2021] 9 S.C.R. 787 · Decided: 09-12-2021 · Supreme Court of India · Bench: K.M. JOSEPH · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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   [2021] 9 S.C.R. 787
787
JACOB PUNNEN & ANR.
v.
UNITED INDIA INSURANCE CO. LTD.
(Civil Appeal No. 6778 of 2013)
DECEMBER 09, 2021
[ K. M. JOSEPH AND S. RAVINDRA BHAT , JJ.]
Consumer Protection Act, 1986 – s.2(g) – Insurance policy –
Renewal of – Limitations imposed on Insurer’s liability – Non-
disclosure by Insurer – Deficiency in service – Appellants had an
annual medical insurance policy with the respondent-insurer – Policy
was renewed successively by paying appropriate premium — Policy
containing fresh terms was issued after receipt of the premium for
the year 2008-09 – Introduction of the cap on the coverage by the
insurer on certain types of surgical procedures – Second appellant
underwent  angioplasty in June 2008 – Appellants submitted claim
to the insurer who accepted the claim but, paid the partial amount –
District Forum allowed the appellants’ complaint – Findings upset
by State Commission – Order upheld by NCDRC – On appeal, held:
Per S. Ravindra Bhat, J. Appellants were kept in the dark and asked
to renew a policy, the terms of which had undergone a significant
change as its cover was radically different and imposed limitations
on the insurer’s liability – 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 – Insurer was under a duty to inform the appellant
about the limitations which it was imposing in the renewed policy —
Failure to inform the policy holders resulted in deficiency of service
– Per K.M. Joseph, J. (Supplementing) There was unjustifiable non-
disclosure by the Insurer about the introduction of limitation clause
which constituted a deficiency in service – Orders of NCDRC and
State Commission set aside and that of the District Forum restored –
Contract Act, 1872 – s.22 – Principle of uberrima fides – Constitution
of India – Part IV – Arts.38, 39, 42, 47 – Insurance Regulatory and
Development Authority, 1999 – Insurance Act, 1938 – IRDA (Health
Insurance) Regulations, 2016 – Chapter III – Regulations 11, 13 -
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SUPREME COURT REPORTS
[2021] 9 S.C.R.
Universal Declaration of Human Rights 1948 – Article 25 –
International Covenant on Economic, Social and Cultural Rights,
1976.
Insurance – Renewed contract – Held: A renewed contract
of insurance may provide terms which are different from the terms
of the original contract of insurance – If the renewed contract is
agreed in all respects by both parties, the fresh terms (with
restrictions) would be binding.
Insurance – Renewal of existing policy – Duty of insurers –
Discussed.
Consumer Protection Act, 1986 – s.2(g) – Deficiency in service
– Held: In order to demonstrate deficiency, it is not necessary that
the same emanates only from a law or a contract – The term “or
otherwise” in s.2(g) clearly provides for circumstances where a
certain level of service is expected from a provider.
Doctrines/Principles – Insurance – Principle of uberrima
fides – Applicability of – Discussed.
Insurance – Standard Form Contracts – Unfair contractual
terms – Refusal for enforcement of – Power of Courts – Discussed.
Insurance – Role of insurance agents – Failure to discharge
the duties – Vicarious liability of the insurer – Discussed.
Words & Expressions – Contracts d’ adhesion – Held: Most
policies- health and medical insurance policies being no exception,
are in standard form – One who seeks coverage of a life policy/a
personal risk, such as accident or health policy has little choice
but to accept the offer of certain standard term contracts termed as
contracts d’ adhesion, a French legal term.
Allowing the appeal, the Court
HELD: Per S. RAVINDRA BHAT, J.
1.1 Renewal: 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 can be said to be no consensus ad
idem on the introduction of the cap on the coverage by the insurer,
as the appellants were not informed that they had paid premium
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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 a

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