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2019 (4) TMI 881 - HC - Indian LawsCancellation of the policy of insurance - group discount in respect of J.P.A. (Group) Policy - natural person who claims to be a beneficiary of a J.P.A. Group Insurance Policy - HELD THAT - In the present case the parties are governed by the terms and conditions of J.P.A. Group Policy. The stand taken by the insurance company is that such policy underwent a revision subsequently and that the insurance company changed its policy. The change in the policy is reflected in the writing dated August 1 2002. The insurance company is no longer in a position to continue with a long-term J.P.A. Group Insurance cover for 15 years granting a cover of 10 lacs. An insurance company is entitled to change its policy. This change in policy led to the issuance of the impugned letter dated August 1 2002 - The fact that there is a change of policy is not disputed. The writing dated August 1 2002 itself not contains the justification of change in policy. The justification is set forth in the affidavit of the insurance company. A Court is entitled to consider the materials on the basis of which the impugned decision was taken. In the facts of the present case change of policy is a complete justification for the termination. The impugned letter dated August 1 2002 therefore in such that it cannot be said to be arbitrary requiring interference by a writ Court. The insurance company having acted in terms of the contract between the parties as contained in J.P.A. Group Insurance Policy it cannot be said that such an action is arbitrary or unreasonable. The parties to a contract must abide by it howsoever unreasonable one of the parties may find such terms to be. It is of no consequence that the Court might find the action taken on the basis of the agreed terms to be unreasonable. It is not for the Court to rewrite the contract for the parties. There is no infirmity in the impugned actions taken by the insurance company - petition dismissed.
Issues Involved:
1. Are the writ petitions maintainable? 2. Are the letters of cancellation of the policy of insurance bad? 3. To what relief or reliefs, if any, are the parties entitled to? Issue-wise Detailed Analysis: Issue 1: Are the writ petitions maintainable? The partnership firm filed the first writ petition against the letter dated May 7, 1999, issued by the insurance company, which directed group discount in respect of J.P.A. (Group) Policy. The second writ petition was filed by a natural person, a beneficiary of the J.P.A. Group Insurance Policy, challenging the letter dated August 1, 2002. The third writ petition by the partnership firm also assailed the letter dated August 1, 2002. The partnership firm claimed to be engaged in mobilizing investable funds and had a memorandum of understanding (MoU) with the insurance company to extend group insurance benefits to its investors, workers, and agents. The insurance company allowed the firm to collect premiums for J.P.A. Group Insurance Policy. The certificate of insurance issued contained terms and conditions, including Condition No. 5, which allowed the company to terminate the policy with notice and refund the premium pro-rata. The court found that the rights of the partnership firm were affected by the insurance company's actions, making the first and third writ petitions maintainable. The insurance company, being an instrumentality of the State under Article 12 of the Constitution, was subject to judicial review. The second writ petition was also maintainable as the natural person’s rights as a beneficiary were affected. However, the court ruled that contracts between the parties were non-statutory and purely contractual, with no public element involved. The policy was not open to the public at large and was restricted to those associated with the partnership firm. Therefore, the writ petitions were not maintainable under Article 226 of the Constitution as they involved purely contractual disputes without a public element. Issue 2: Are the letters of cancellation of the policy of insurance bad? The partnership firm and the insurance company acted based on the MoU. The insurance company issued certificates of insurance to natural persons, which included Condition No. 5 allowing termination with notice. The insurance company changed its policy and issued the letter dated August 1, 2002, canceling the long-term J.P.A. Group Policy, reducing coverage to ?1 lakh for 5 years. The doctrine of promissory estoppel requires a party to honor promises if the promisee altered its position to its detriment. However, it does not apply if the promise is contrary to law or outside the promisor’s authority. A government or its body can change its policy, and the principles of promissory estoppel do not apply in such cases. The court found that the insurance company was entitled to change its policy, and the change justified the termination of the subsisting policy. The terms of the contract allowed the insurance company to cancel the policy with notice, and the action was not arbitrary. The insurance company’s justification for the change in policy was valid, and the cancellation was in accordance with Condition No. 5 of the J.P.A. Group Policy document. Issue 3: To what relief or reliefs, if any, are the parties entitled to? Given the decisions on the first and second issues, no relief could be granted to the petitioners. The writ petitions were dismissed, and no relief was granted in G.A. No. 524 of 2018. No order as to costs was made. Conclusion: W.P. No. 1114 of 1999, W.P. No. 2146 of 2002, and W.P. No. 2343 of 2002 were dismissed, and no relief was granted to the petitioners. G.A. No. 524 of 2018 was also dismissed with no order as to costs.
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