Delhi Consumer Commission Holds Bharti AXA & Its Agent Jointly Liable For Failing To Inform Policyholder About Policy Cancellation
Pranav B Prem
The Delhi State Consumer Disputes Redressal Commission, comprising Ms. Pinki (Judicial Member) and Ms. Bimla Kumari (Member), held Instant Healthcare Pvt. Ltd. (insurance agent) and Bharti AXA General Insurance Co. Ltd. jointly and severally liable for deficiency in service for failing to inform the insured about the cancellation of a mediclaim policy and for not refunding the premium. Allowing the appeal filed by the complainant, the Commission directed the opposite parties to reimburse the medical expenses with interest.
Background Facts
The complainant, Brijesh Kumar Sharma, had taken a mediclaim policy through Instant Healthcare Pvt. Ltd. (Opposite Party No. 1) by paying ₹3,114 as the first premium on 30.09.2009. The policy (No. 00005928) issued by Bharti AXA General Insurance Co. Ltd. was valid from 01.01.2010 to 31.12.2010. On 20.12.2010, the complainant’s wife underwent surgery for breast cancer at Pushpanjali Crosslay Hospital, Noida. When the complainant sought a cashless facility for treatment expenses of ₹61,499, the insurer failed to process the claim.
Aggrieved by the denial of benefits, the complainant filed a complaint before the District Consumer Disputes Redressal Forum (East), Delhi, seeking reimbursement of ₹61,499 with 24% interest, ₹25,000 as compensation for mental agony, and ₹10,000 as litigation costs. Initially, the District Forum proceeded ex parte against the opposite parties and allowed the complaint. However, upon appeal, the State Commission, by order dated 11.05.2015, set aside the ex parte order and remanded the matter for fresh adjudication. Upon rehearing, the District Forum held that while the complainant was not informed about the cancellation of the policy and the agent failed to refund the premium, the insurer was absolved of liability. Dissatisfied with the insurer being exonerated, the complainant filed the present appeal before the Delhi State Consumer Commission, challenging the District Forum’s findings.
Arguments of the Parties
The appellant argued that the insurer, despite having full details of the insured, failed to notify the complainant about the cancellation of the policy, which violated Clause XVIII of the policy terms mandating a 15-day notice before cancellation. The appellant contended that the failure to issue such notice rendered the cancellation illegal and amounted to deficiency in service. It was further submitted that the insurer could not escape liability by shifting the blame onto the agent, as both were jointly responsible for maintaining and communicating the policy’s status. The complainant also asserted that no evidence was produced to show that the insurer refunded the premium amount, and therefore, both opposite parties should be held jointly and severally liable.
Conversely, Bharti AXA General Insurance Co. Ltd. argued that it had informed the agent about the policy’s cancellation and refunded the proportionate premium to the agent. It contended that there was no direct contractual relationship (privity of contract) between the complainant and the insurer, and therefore, the complainant could not claim against it directly. The insurer also maintained that the policy had been cancelled before the hospitalization, and the District Forum’s order warranted no interference.
Observations and Findings
The Commission concurred with the District Forum’s finding that there was deficiency in service on the part of the opposite parties. It noted that the complainant was never informed about the policy’s cancellation and that the premium was not refunded. It observed that the insurer, being the issuing authority and having complete details of the insured, bore a legal as well as moral duty to communicate the cancellation directly to the policyholder, rather than only to the agent. The agent’s failure to pass on this information misled the complainant into believing that the policy remained active.
Relying on the Supreme Court’s decision in Jacob Punnen & Anr. v. United India Insurance Co. Ltd., the Commission reiterated that insurers are obligated to directly inform policyholders of any material change, including cancellations, and that failure to do so constitutes deficiency in service. The bench also noted that no 15-day prior written notice, as required under Clause XVIII of the policy terms, had been issued. Furthermore, the insurer had refunded the premium to the agent instead of the complainant, who remained unaware of the cancellation.
Holding that both the insurer and the agent were jointly responsible, the Commission disagreed with the District Forum’s decision to fix liability solely on the agent. It ruled that both Bharti AXA General Insurance Co. Ltd. and Instant Healthcare Pvt. Ltd. were jointly and severally liable to pay the complainant ₹61,499 along with applicable interest. The Commission directed that the payment be made within three months from receipt of the order, failing which the amount would carry interest at 9% per annum from the date of judgment until realization. Accordingly, the appeal was allowed, and the District Forum’s order was modified to hold both opposite parties jointly and severally liable.
Cause Title: Brijesh Kumar Sharma vs Instant Healthcare Private Ltd
Case No: First Appeal No. FA/491/2017
Coram: Ms. Pinki (Judicial Member), Ms. Bimla Kumari (Member)
