1.      The present Revision Petition, under Section 21 (b) of the Consumer Protection Act, 1986 (for short “the Act”) has been filed by the Petitioner against order dated 01.11.2010 of the Andhra Pradesh State Consumer Disputes Redressal Commission, Hyderabad (for short “State Commission”) in First Appeal No. 1143 of 2008 wherein the Appeal filed by the Petitioner was dismissed.

2.      The case of the Complainant is that the Opposite Party Insurance Company issued a Policy for Rs. 50 Lakhs covering a period of 12 years from 11.10.2000 by collecting an annual premium of Rs. 5,48,427. The Complainant stated that he underwent angiogram during April, 1986 for coronary artery disease class-II angina atypical with hyperlipidaemia. In the year 2002 he could not pay the premium due to financial difficulties but subsequently sought revival of the Policy in March 2005. The Insurance Company sought medical examination as a pre-condition for revival of the Policy and the Complainant accordingly furnished his medical reports, wherein there was no variation. The Insurance Company agreed to revive the Policy on payment of penalty of Rs. 2,37,111/- in addition to the regular annual premium with arrears. Though the Complainant had agreed to their proposal, the Opposite Party later, vide letter dated 08.04.2000 intimated rejection of revival of the Policy to the Complainant. The Complainant, therefore, filed a complaint before the District Forum with the following prayer: -

“a). directing the Respondents to revive the insurance policy by collecting the arrears of premia or pay the Complainant the claim amount of Rs. 20,00,000.00 with further interest thereon at 18% p.a. from the date of filing of the complaint till realization.

b). Costs of filing the Complaint

c). and to pass such other and further relief as deem fit and proper in the circumstances of the case.”

3.      The case of the Complainant was contested by the Opposite Parties who stated that the Complainant had expressed his desire for taking an Insurance Policy. A Policy was issued on 11.10.2000 to the Complainant curtailing the coverage period to 12 years as against 15 years, on payment of extra premium at 7.5% over and above the regular premium, since potential health risk surfaced from his medical reports. As the Complainant defaulted and did not pay premium for full three years, he was not entitled for revival of the Policy or surrender value. The expert committee of the Insurance Company considered the case of the Complainant and found that his Policy could not be revived in view of his medical health record. The Insurance Company had every right to either accept or reject revival of an Insurance Policy. They relied on Condition 4 of the Insurance Policy which stipulated that “If after at least three full years premium have been paid in respect of the policy, any subsequent premium be not duly paid, the policy shall not be wholly void, but the sum assured by it shall be reduced to such a sum as shall bear the same ratio with the full sum assured.”

4.      The District Forum, after hearing the Counsel for both the Parties and perusing the record dismissed the Complaint as under: -

“The complainant failed to establish the deficiency of service on the part of the opposite parties 1 and 2. Accordingly these points 1 and 2 are answered in favour of the opposite parties 1 and 2 against the complainant.

18. TO WHAT RELEIF: IN THE RESULT, the complaint is dismissed without costs.”

5.      Aggrieved by the order of the District Forum, Appeal was filed by the Complainant before the State Commission, which allowed the Appeal as under: -

“ In the result the appeal is allowed setting aside the order of the Dist. Forum. Consequently the complaint is allowed in part directing the insurance company to pay Rs. 10,96,854/-, However, no costs. Time for compliance four weeks.”

1. The amount of Rs. 10,96,854/- was arrived at by the State Commission by considering the amount paid by the Complainant towards Insurance Policy premium for two years.

   7.      Aggrieved by the order of the State Commission, the Opposite Parties preferred the present Revision Petition. Heard the Learned Counsel for Parties and carefully perused the record. The brief facts of the case are that the Opposite Party/Insurance Company issued a Policy for Rs. 50 Lakhs, initially covering a period of 12 years from 11.10.2000 by collecting annual premium of Rs. 5,48,427. In the year 2002 he could not pay the premium due to financial difficulties but subsequently sought revival of the Policy in March 2005. The Insurance Company sought medical examination as a pre-condition for revival of the Policy and the Complainant accordingly furnished his medical reports wherein there was no variation. The Insurance Company agreed to revive the Policy on payment of penalty of Rs. 2,37,111/- in addition to the regular annual premium with arrears. The Counsel for the Petitioner contended that the State Commission erred in not appreciating that an Insurance Company had the right to accept or reject the Complainant’s request to revive his Insurance Policy. He further stated that the rejection of the Complainant’s request to revive his Policy was justified and was taken based on the advice of their expert committee, which recommended against reviving the Policy. The Counsel for the Respondent, however, stated that the Respondent in good faith, had complied with the request to send medical reports and expressed his willingness to pay the penalty and premium arrears as per the Insurance Company’s demands. He further stated that the Insurance Company having asked the Respondent to submit medical reports cannot subsequently act in a mala-fide manner and refuse to revive the Insurance Policy.

   8.    The District forum dismissed the Complaint by relying on Condition 4 and 5 of the Insurance Policy by holding that it is the discretion of the Insurance Company to accept or reject the revival of Insurance Policy. The State Commission, while setting aside the order of the District Forum, observed that even though Insurance Company had the right to accept or reject revival of a discontinued Policy, the same must be done on justifiable grounds. The State Commission in this regard relied on the decision of the Hon’ble Supreme Court in Biman Kishore Bose Vs. United India Insurance Company Ltd. 2001 (3) CPJ 10 SC wherein it was held that “once it is found that the act of an Insurance Company was arbitrary in refusing to renew the policy, the policy is required to be renewed with effect from the date when it fell due for its renewal.” The Petitioners assailed the State Commission’s order stating that the denial of reviving the Complainant’s Insurance Policy was justifiable on the ground that the Medical Officer at the Central Underwriting Section (CUS) confirmed abnormality in the Stress Test of the Complainant and opined declinature of the risk. In support of this, the Insurance Company relied on the CUS rating sheet having MO’s opinion at the time of revival of Policy. A perusal of the said CUS Rating sheet, however, does not anywhere mention that the Medical Officer had opined declinature of risk. The CUS sheet merely stated that “Case referred to CUS in view of earlier decided by CUS at prop stage”. This indicates that based on the Rating Sheet, the case was referred to CUS, however, does not reveal the Opinion of the CUS Medical Officer with respect to declinature of risk. The other ground urged by the Insurance Company to justify rejecting revival of the Insurance Policy was the opinion of SR Zurich, vide email dated 30.10.2006, that “TMT has been positive since 2000. In view of safe and consistently positive TMT’s, SR Zurich, has recommended no reconsideration on this case.” This reveals that the Complainant was tested positive for TMT since 2000, i.e. even when the Insurance Policy was first taken. Positive TMT was not a condition which the Complainant developed during the time when the policy had lapsed, due to non-payment of premium. Moreover, the Petitioner also admitted that the reports of Medical Tests conducted during revival of Insurance Policy showed “similar results with no variation in comparison to the results of medical reports of the tests conducted earlier at the time of purchasing the Policy in the year 2000. There was no change in the result of Tread Mill Test (TMT) as well, and it continued to indicate a positive report.” In the absence of any new medical condition which could have justified the Insurance Company’s decision to reject the revival of the Policy and the medical condition of the Complainant being unchanged since he initially purchased the Policy, I find that the decision to reject the revival of Insurance Policy, was arbitrary, unjustifiable and in teeth of the law laid down by the Hon’ble Supreme Court in Biman Kishore Bose Vs. United India Insurance Company Ltd. The State Commission has rightly held that “the Insurance Company having collected Rs. 10,96,854 towards premium cannot appropriate the amount, on specious reasons and laconic reading of condition 4”, and therefore  had correctly awarded the same to the Complainant.

9.   In view of the above, I find no infirmity with the order of the State Commission. The present Revision Petition is accordingly dismissed.