Sanjeev Prakash Sharma, J. - Brief facts of the case reveal from the record are that petitioner has taken a family medi-claim insurance policy from the respondent-National Insurance Company Limited (hereinafter referred as the Insurance Company) in the year 1996 and the said policy was being continuously renewed and since 2002 it was effective for the period from 22nd November to 21st November of the next year. The policy covered a sum of Rs. Three Lac.

2. Initially, the policy was for the petitioner, his wife and two children. In 1998-99 his mother was also added. In 2007, the policy was split into two, one covering the petitioner and his mother and the other covering his wife and two children. Initially, the premium of Rs. 2825/- was paid in 1996 which increased to Rs. 10,330/- excluding service tax and family discount. A total amount of Rs. 20,885/- was thus paid for the year 2007-08.

3. The petitioner was diagnosed of suffering Common Variable Immune Deficiency (CVID) with Pancytopenia (below normal blood counts) and Malabsorption Syndrome (absorption and assimilation of food is affected) and calcium metabolism dysfunction for which he was put on intravenous monthly infusion w.e.f. September, 2004 under hospitalization. Later on, he developed Hodgkins Disease Stage IV (malignancy of lymphatic system) for which he undertook chemotherapy. He is under regular treatment and is required infusion every four to five weeks under hospitalization and was hospitalized in his own hospital namely; Dhuleshwar Hospital & Laser Skin Centre. The National Insurance Company Ltd. Jaipur Branch, Jaipur was releasing the expenses under the medi-claim policy as per the limit.

4. It is case of the petitioner that while he was granted reimbursement for the year 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08, the petitioners policy was renewed through the agent namely; Alankrit, New Delhi (hereinafter referred as TPA). The TPA sent pre-acceptance vouchers for the claims after deducting hospitalization and nursing charges which was not accepted by the petitioner. The fifth claim was, however, submitted directly by sending cheque for the fifth hospitalisation to which the petitioner submitted his objections and also filed a complaint before the Insurance Ombudsman.

5. The Insurance Ombudsman passed an order to make the payment with interest of 8%. Subsequent claims thereafter came to be refused and ultimately the petitioner stated to have sent a legal notice.

6. In November, 2008, the petitioner sent a premium amount of Rs. 12,260/- for medi-claim policy of himself and his mother. However, the Branch Manager vide his letter dated 19/11/2008 refused and returned to the petitioner with a demand of renewal of policy through TPA for a premium amount of Rs. 13,943/-. The same was also sent alongwith prescriptions to be signed alongwith proposal form which contained the conditions different from the original cover policy under which the petitioner was getting his insurance renewed.

7. Fearing discontinuance of the policy and also that a new policy may not be granted to the petitioner on account of his existing diseases, the petitioner submitted to the demand and signed prospectus to avoid any practise in the renewal of the policy under protest. Letter of protest was also sent duly received in the office of the respondents on 20/11/2008.

8. Learned counsel for the petitioner submitted that while the premium was increased, the coverage was the same. The condition was, however, put that the petitioner has to sign the prescriptions that the renewal would be done through TPA only and treatment in his own hospital would be excluded. In the prospectus of the Insurance Company, it was mentioned that the payment for the room rent was limited to only 1% of the sum insured subject to maximum of Rs. 5,000/- and if admitted to ICU, 2% of the sum insured with maximum of Rs. 10,000/- and overall limit under the head was 25% of the sum insured. The fees was also limited under the new policy upto 25% of the sum insured. Similarly, the costs of implants, medicines, drugs, diagnostic material, X-Ray, dialysis, Chemotherapy, Radiotherapy was also limited to 50% of the sum insured. Being aggrieved of the same, the petitioner has preferred this writ petition with the following prayers:-

(i) by issuance of writ of certiorari or any other appropriate writ, order or direction in the nature thereof, the incorporation of the sub limits in clause 1.2 (a), (b) and (c) of the prospectus (Insurance Policy of the Petitioner) be struck down and the respondents be restrained from imposing any such sub limits;

(ii) by issuance of further writ of certiorari or any other appropriate writ, order or direction in the nature thereof, the condition No. 3 of the letter dated 17th November, 2008 by which treatment in his own hospital has been excluded be declared to be ultra vires Articles 14 and 21 of the Constitution of India and be struck down as null and void and the respondents be restrained from imposing any such condition;

(iii) by a writ of mandamus or any other appropriate writ, order or direction in the nature thereof, the respondents be directed to pass the claims of the petitioner without insisting upon the applicability of the sub limits and without applicability of the condition of treatment in his own hospital and full reimbursement of as in the past be allowed;

(iv) by a further writ of mandamus or any other appropriate writ, order or direction in the nature thereof, the respondents be directed to consider the petitioners policy as a non-TPA policy;

(v) by a further writ of mandamus or any other appropriate writ, order or direction in the nature thereof, the respondents be directed to pass forthwith all pending claims of the petitioner forthwith with interest @ 12% per annum;

(vi) Interim Relief as prayed for be granted.

(vii) Any other order or direction which this Honble Court deems just and proper in the facts and circumstances of the case may also be passed in favour of the petitioner."

9. Learned counsel for the petitioner argued that the conditions as laid down in the prospectus for the year 2008 could not have been applied to the petitioner or his family members as they were governed by the conditions laid down in the policy alone. The submission further was that as case of the petitioner is of renewing of the policy and not a fresh policy, the conditions as noted above, could not have been applied to him. The premium which he was putting had increased gradually but was in continuation from the original date of having entered into a policy with the respondents i.e. in 1996. it is submitted that the conditions itself were unjustified and illegal. The petitioner could not be deprived from getting treatment in his own hospital. Such a condition has been only carved out for the petitioner and mainly on account of the fact that he had approached the Insurance Ombudsman for the previous year claim. It is submitted that even in the conditions of policy, there was no such previous conditions and the same was a tailor made condition with a view to harm and deprive the petitioner from treatment in his own hospital. Learned counsel submitted that since the nature of disease is such that the petitioner is required to be kept in isolation, the petitioner could not be denied treatment in the hospital owned by him. Further, it was submitted that the respondents had acted unjustifiably in not taking into consideration the fact that the hospital owned by the petitioner namely: Dhuleshwar Hospital & Laser Skin Centre was one of the duly authorized hospitals under the insruance cover. The petitioner has taken to this Court to the said documents to assert that the hospital was a recognized hospital for the purpose by the respondents. The petitioner further submits that the conditions which were imbibed in the prescription issued for the year 2008-09, 2009-10 and onwards could not have been treated to be applied on the petitioner as his case was that of renewal and not a fresh insurance. Learned counsel has taken this Court to the various conditions of the prescriptions to submit that the renewal of policy has to be distinguished from the new policy. It is further submitted that mother of the petitioner, who had also suffered medical ailment and was hospitalized in the same hospital, was granted reimbursement.

10. Learned counsel relied on the law as laid down by the Apex Court in the case of Biman Krishna Bose vs. United India Insurance Co. Ltd. : (2001) 6 SCC 477 [LQ/SC/2001/1611] to

submit that a renewal of policy means repetition of the original policy. The terms and conditions of the original policy cannot be changed and the only change could have been in relation to the date up to which it would apply.

11. Learned counsel also pointed out that by an interim order dated 04/02/2013 this Court had directed to reimburse 50% of the amount of bills submitted by the petitioner under the policy and the said interim order was challenged by the respondent-Insurance Company before the Division Bench in DB Special Appeal (Writ) No.735/2013 which was dismissed and it was reiterated that payments would abide by the final decision of the writ proceedings.

12. It is further submitted that renewal of the policy was a continuous process and the action of the respondents in denying the claim from 2008-09 relating to the same policy, was unjustified on account of the malice occasioned due to the petitioner taken up the matter before the Insurance Ombudsman. It is submitted that no ceiling limit on the expenses incurred in medical treatment could be imposed as the same was not there in the original policy.

13. Further, it is submitted that the prescriptions and the new conditions would apply to a person who takes up the insurance policy in the year 2008 for the first time. Learned counsel also submitted that merely because the petitioner was suffering illness and was not in a position to bargain with the respondents and therefore, signed the new policy and also paid premium, he cannot be deprive the challenge the said conditions. He relies on the judgment passed by the Supreme Court in the case of ABL International Ltd. and ors vs. Export Credit Guarantee Corporation of India Ltd. and ors: 2004 (3) SCC 553; United India Insurance Company Ltd. and ors vs. Manubhai Dharmasinghbhai Gajera and ors: 2008 (10) SCC 404 [LQ/SC/2008/1286] ; Central Inland Water Transport Corporation Ltd. and ors vs. Brojo Nath Ganguly and ors: AIR 1986(SC) 1571 [LQ/SC/1986/114] and also other judgments to contest that writ petition would lie against the respondents and also that the conditions of the policy could be examined and judicial review is available.

14. Per-contra, learned counsel for the respondents submits that the petitioner himself is a Doctor and is having his own hospital. Taking into consideration that there are possibilities of the petitioner misusing the terms of the insurance policy, for his own advantage, the Insurance Company has decided not to allow him treatment in his own hospital. It is submitted that the terms and conditions are in the nature of contract and the same cannot be a subject matter of examination before this Court. There is no element of public law or fundamental rights involved in the facts of the case. While issuing medi-claim insurance policy to an individual, a contract of insurance is arrived at which is a purely commercial activity and does not entail discharge of sovereign function or statutory body and is therefore, no a statutory contract. Merely because the respondent Company is a nationalized company, there is no occasion to invoke jurisdiction of this Court under Article 226.

15. Learned counsel for the respondents fairly submitted that the respondent Company is an instrumentality of the State but the work which is being discharged by issuing medi-claim insurance policy could not be said to be of statutory nature. Further, it is submitted that the policies in question were not single policy but were series of annual contracts and it cannot be said to be a renewal of earlier policy. The premium in case of medi-claim policy increases with efflux of time depending on the age and the number of insured persons. Since medi-claim policy is an indemnification of insurance, it is the actual expenses incurred by him. However, as the petitioner himself is an owner/proprietor of the Dhuleshwar Hospital & Laser Skin Centre, the payment of the same was to himself and thus his claim was merely a case of unjustified enrichment.

16. Counsel further submitted that hospital visitation was conducted by the representative TPA Alankrit Health Care Limited who had given adverse report. Since the medi-claim policy is neither automatic on expiry of the earlier policy and has to be freshly issued and as the policy of the petitioner was upto 2007- 08, the terms of policy prior to 2007-08 could not be applied thereafter and the respondents were within their rights to lay down conditions as forwarded in the prospectus. It is further submitted by way of an additional affidavit that RIDA had approved the new conditions which formed a part of the prospectus. In this regard, the underwriting guidelines issued vide circular dated 23/03/2007 have been relied upon to point out that the existing medi-claim policy was revised and modified by the said circular and in terms of the same, conditions were mentioned in the prospectus which were asked to be signed by the respondents in 2008. Since the said circular is not under challenge, the conditions in the prospectus could not be challenged independently. It is submitted that the introduction of sub-limits was introduced in the said circular of 23/03/2007.

17. Counsel further submitted that the respondents had also obtained medical opinion in respect of CVID and submitted that there is no hospitalisation required. Opinion this guard has been placed on record of one Dr. Zain-Ul-Abideen who is the claims head of the claim department and therefore, the claims were rightly rejected. The hospital Dhuleshwar Hospital & Laser Skin Centre was deleted from the list of hospitals under the Alankrit Health Care Limited and was de-panelled by them. In the circumstances therefore, no objection could have been raised with regard to denial of the claim.

18. In rejoinder, it is pointed out by counsel for the petitioner that the hospital was duly recognized hospital by the respondents for grant of benefit of claim prior to 2008 and while the so-called change has been made in the policies in the year 2007 vide letter of March, 2007, the claim of the petitioner for 2007 had been also clear and it is only in 2008 that claim of the petitioner has been denied and new conditions have been imposed which are with the sole purpose to deprive the petitioner of his rightful claim. It is submitted that it is not a case where the petitioner has been found to be wrongfully claiming treatment claims. Apprehensions that the claim might have been inflicted is wholly baseless. It is further pointed out that the documents placed by the respondents alongwith their reply regarding visitation of the hospital did not inspire confidence as the two visitation details show date and time of the visitation of the same day i.e. 10/12/2007, one at 11 to 12 pm which mentions of Dr. Rahul Agarwal working at home and his servant gave such a statement and there was no staff in the hospital and such a visitation could not have been done in the night at 11 to 12 pm and seems to have been prepared in their own office. Similarly, the other visitation mentions time of 4.00 pm and records that the petitioner had already been discharged on 09/12/2007. The claim ought to hav been released. The mother of the petitioner was being given the same benefit which she was getting under the old policy and therefore, it cannot be said that the new policy has been issued from 2008 onwards. The facts as stated have not been denied.

19. After noting above, this Court finds that the Supreme Court in the case of Biman Krishna Bose vs. United India Insurance Co. Ltd. & anr (supra), has held as under:-

"5. A renewal of an insurance policy means repetition of the original policy. When renewed, the policy is extended and the renewed policy in the identical terms from a different date of its expiration comes into force. In common parlance, by renewal, the old policy is revived and it is sort of a substitution of obligations under the old policy unless such policy provides otherwise. It may be that on renewal, a new contract comes into being, but the said contract is on the same terms and conditions as that of the original policy. Where an insurance company which has exclusive privilege to carry on insurance business has refused to renew the medi-claim policy of an insured, on extraneous and irrelevant considerations, any disease which an insured had contacted during the period when the policy was not renewed, such decease cannot be covered under a fresh insurance policy in view of the exclusion clause. The exclusion clause provides that the pre-existing diseases would not be covered under the fresh insurance policy. If we take the view that the medi-claim policy cannot be renewed with retrospective effect, it would give handle to the insurance company to refuse the renewal of the policy on extraneous consideration thereby deprive the claim of insured for treatment of diseases which have appeared during the relevant time and further deprive the insured for all time to come to cover those diseases under an insurance policy by virtue of the exclusion clause. This being the disastrous effect of wrongful refusal of renewal of the insurance policy, the mischief and harm done to the insured must be remedied. We are, therefore, of the view 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."

20. This Court also finds that the petitioner has been regularly paying premium from 1996 to the respondents as per their demand. The additional condition of the respondents in not allowing the petitioner to get treatment from his own hospital is clearly arbitrary, whimsical and appears to be on account of the fact that the petitioner had approached Insurance Ombudsman for getting his claims for the subsequent year. Malice is a form which may be deduce from the facts or the circumstances. The action has to be adjudged to infer malice and bias.

21. In the case of Ranjit Thakur vs. Union of India and others: 1987 (4) SCC 611 [LQ/SC/1987/698] , the Apex court has observed as under:-

"17. As to the tests of the likelihood of bias what is relevant is the reasonableness of the apprehension in that regard in the mind of the party. The proper approach for the judge is not to look at his own mind and ask himself, however, honestly, "Am I biased" but to look at the mind of the party before him.

18. Lord eshar in Allinson vs. General Council of Medical Education and Registration said:

The question is not, whether in fact he was or was not biased. The Court cannot inquire into that. In the administration of justice, whether by a recognised legal court or by persons who, although not a legal public court, are acting in a similar capacity, public policy requires that, in order that there should be no doubt about the purity of administration, any person who is to take part in it should not be in such a position that he might be suspected of being biased.

19. In Metropolitan Properties Co. (F.G.C.) Ltd. vs. Lannon, Lord Denning M.R. observed:

........In considering whether there was a real likelihood of bias, the court does not look at the mind of the justice himself or at the mind of the Chairman of the tribunal, or whoever it may be, who sits in a judicial capacity. It does not look to see if there was a real likelihood that he would, or did, in fact favour one side at the expense of the other. The court looks at the impression which would be given to other people. Even if he was as impartial as could be, never-the-less if right minded persons would think that, in the circumstances there was a real likelihood of bias on his part, then he should not sit.

20. Frankfurter, J-in Public Utilities Commission Of The District Of Columbia vs. Pollack said:

The judicial process demands that a judge move within the frame work of relevant legal rules and the covenanted modes of thought for ascertaining them. He must think dispassionately and submerge private feeling on every aspect of a case. There is a good deal of shallow talk that the judicial robe does not change the man within it. It does. The fact is that on the whole judges do lay aside private views in discharging their judicial functions. This is achieved through training, professional habits, selfdiscipline and that fortunate alchemy by which men are loyal to the obligation with which they are entrusted. But it is also true that reason cannot control the subconscious influence of feelings of which it is unaware. When there is ground for believing that such unconscious feelings may operate in the ultimate judgment, or may not unfairly lead others to believe they are operating, judges recuse themselves. They do not sit in judgment.

21. Referring to the proper test, Ackner LJ in Regina vs. Liverpool City Justices, Ex-Parte Topping said:

Assuming therefore, that the magistrates had applied the test advised by Mr. Pearson - Do I feel prejudiced- then they would have applied the wrong test, exercised their discretion on the wrong principle and the same result, namely the quashing of the conviction, would follow."

22. In the case of Amar Nath Chowdhury vs. Braithwaite and Company. Ltd. and others: 2002 (2) SCC 290 [LQ/SC/2002/33 ;] , the Apex Court has noted that the bias may be on different grounds and forms, it may be pecuniary, personal or there may be bias as to the subject matter.

23. In the present case, although the personal bias may not be present, it is, however, present as to the subject matter itself. Once a verdict was given against the respondent-company by the Ombudsman for a particular year, subsequent year benefits have been denied arising out of the bias and malice.

24. In the case of Ramesh Chandra vs. University of Delhi and others:2015 (5) SCC 549 [LQ/SC/2015/177 ;] , the Apex Court has held that specific pleadings are required to be made for examining the allegations of malafides.

25. In the case of R.S. Garg vs. State of U.P. and others: 2006 (6) SCC 430 [LQ/SC/2006/664] , the Supreme Court has succinctly laid down law in this regard as under:-

"27. The said principle has been narrated briefly in Smt S.R. Venkataraman vs. Union of India in the following terms: (SCCp. 494, para 5)

Thus malice in its legal sense means malice such as may be assumed from the doing of a wrongful act intentionally but without just cause or excuse, or for want of reasonable or probable cause."

26. In the case of R.S. Garg vs. State of U.P. and others (supra), the Apex court has further held as under:-

"33. A discretionary power as is well known cannot be exercised in an arbitrary manner. It is necessary to emphasise that the State did not proceed on the basis that the amendment to the Rules was not necessary. The action of a statutory authority, as is well known, must be judged on the basis of the norms set up by it and on the basis of the reasons assigned therefore. The same cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. {See Mohinder Singh Gill v . The Chief Election Commissioner, Commissioner of Police vs. Gordhandas Bhanji and also Hindustan Petroleum Corporation Ltd. vs. Darius Shapur Chenai."

27. In the case of Ravi Yashwant Bhoir vs. District Collector Rigad and ors: (2012) 4 SCC 407 [LQ/SC/2012/257] , the Apex Court held in as under:-

"47. This Court has consistently held that the State is under an obligation to act fairly without ill will or malice in fact or in law. Where malice is attributed to the State, it can never be a case of personal ill will or spite on the part of the State. "Legal malice" or "malice in law" means something done without lawful excuse. It is a deliberate act in disregard to the rights of others. It is an act which is taken with an oblique or indirect object. It is an act done wrongfully and willfully without reasonable or probable cause, and not necessarily an act done from ill feeling and spite.

48. Mala fide exercise of power does not imply any moral turpitude. It means exercise of statutory power for "purposes foreign to those for which it is in law intended." It means conscious violation of the law to the prejudice of another, a depraved inclination on the part of the authority to disregard the rights of others, where intent is manifested by its injurious acts. Passing an order for unauthorised purpose constitutes malice in law. (See : Addl. Distt. Magistrate, Jabalpur vs. Shivakant Shukla Union of India V. Ramakrishnan and Ors. and Kalabharati Advertising vs. Hemant Vimalnath Narichania and Ors.)"

28. In the case of Additional District Magistrate, Jabalpur vs. Shivakant Shukla and other connected cases: (1976) 2 SCC 521 [LQ/SC/1976/199] , the Apex Court has held has under:-

"317.I may point out here that the term "mala fide" is often very loosely used. Even in England, the scope of malice is wide enough to include both

"malice in law" and "malice in fact". Lord Haldane in Shearer vs. Shields said:

Between malice in fact and malice in law there is a broad distinction which is not peculiar to any system of jurisprudence. The person who inflicts a wrong or an injury upon any person in contravention of the law is not allowed to say that he did so with an innocent mind. He is taken to know the law and can only act within the law. He may, therefore, be guilty of malice in law, although., so far as the state of ins mind was concerned he acted ignorantly, and in that sense innocently. Malice in fact is a different thing. It means an actual malicious intention on the part of the person who has done the wrongful act."

29. In the case of Ratnagiri Gas and Power Private Limited vs. RDS Projects Limited and others: 2013 (1) SCC 524 [LQ/SC/2012/948] , the Apex Court has held as under:-

"30. Coming then to the question whether the action taken by the Appellant-RGPPL was vitiated by malice in law, we need hardly mention that in cases involving malice in law the administrative action is unsupportable on the touchstone of an acknowledged or acceptable principle and can be avoided even when the decision maker may have had no real or actual malice at work in his mind. The conceptual difference between the two has been succinctly stated in the following paragraph by Lord Haldane in Shearer vs. Shields quoted with approval by this Court Additional District Magistrate, Jabalpur vs. Shivkant Shukla (SCC p. 641, para 317)

317......... Between malice in fact and malice in law there is a broad distinction which is not peculiar to any system of jurisprudence. The person who inflicts a wrong or an injury upon any person in contravention of the law is not allowed to say that he did so with an innocent mind. He is taken to know the law and can only act within the law. He may, therefore, be guilty of malice in law, although., so far as the state of his mind was concerned he acted ignorantly, and in that sense innocently. Malice in fact is a different thing. It means an actual malicious intention on the part of the person who has done the wrongful act. (Shearer case, AC pp. 813-14)"

30. This Court finds in the case in hand that there was an opinion of Dr. L.C. Dhoka, Senior Consultant Visitation with regard to treatment of Dr. Rahul Agarwal as placed on record shows that for the purpose of treatment of immune deficiency he was required to be kept on monthly Immunoglobulin infusion which is an artificial time bound supported immunity and there is always requirement to save from exposure to infusion and precautions in this regard are needed. The IVth infusion as per Dor. LC Dhoka in every four weeks could not have been done in any other hospital which would render the risk of cross-infusion. Since the protocol was to be strictly followed and Dhuleshwar Hospital & Laser Skin Centre was infection free, he was under treatment in the said hospital. The petitioner was under an ongoing treatment since 2004 in the same hospital. It is difficult to understand that when the respondent-Company was allowing claims of the petitioner since 2004 itself, what new circumstances arose to deny the said claim from 2008 except the fact that Insurance Ombudsman had intervened and passed an order against the Insurance Company. It is also seen that the petitioner had refused to take the third party agency.

31. Thus legal bias and malice in law in exercising powers is made out on the part of the respondents in the instant case.

32. The contention of the respondents that the renewal would entail new conditions of the medi-claim policy which has been introduced in 2007, is not sustainable in view of the law laid down by the Supreme Court in the case of Biman Krishna Bose vs. United India Insurance Co. Ltd. & anr. (supra). It is held that the policy of 2008 is a renewal of the original policy which was continued from 1996 so far as the petitioner is concerned and bifurcation of the policies into two parts, one for the mother and the other for the petitioner would not mean that the same is a new policy.

33. The contention of the petitioner that the question regarding policy conditions was not amenable to writ jurisdiction is also rejected. The principles of medical insurance cannot be different from the general insurance. The conditions in a insurance policy giving mutual rights to the parties to terminate the insurance is a common condition in policies as has been held in the case of General assurance Society Limited vs. Chandan Mal Jain and another: AIR 1966 (SC) 1644 [LQ/SC/1966/43] .

34. Having noted the judgment in the case of Biman Krishna Bose vs. United India Insurance Co. Ltd. & anr. (supra), the contention of respondents that the writ petition is not maintainable is also rejected.

35. The Division Bench of Gujarat High Court in the case of United India Insurance Company Ltd. vs. Mohanlal Aggarwal: 2004 AIR (Gujarat) 191 has also examined the terms and conditions of the insurance claim and it would be appropriate to reproduce the reasoning given in the said judgment which provides as under:-

17.1 The I.R.D.A. Act of 1999 established the Authority "to protect the interests of holders of insurance policy". Under Section 14(2)(b) of the Act of 1999, the powers and functions of the authority include, "protection of the interests of the policyholders in matters concerning assigning of policy, nomination by policyholders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance."(Emphasis added) The authority is empowered to supervise the functions of the Tariff Advisory Committee under Clause (n) of Sub-section (2) of Section 14. Under Section 26, the Authority is empowered to make regulations consistent with the Act and the Rules made thereunder to carry out the purposes of the Act.

17.2 In the exercise of its powers under Section 114A(2) (zc) of the Insurance Act, 1938 read with Sections 14 and 26 of the I.R.D.A. Act, 1999, the Authority, in consultation with the Insurance Advisory Committee, has made the regulations known as "Insurance Regulatory and Development Authority (Protection of Policy Holders Interests) Regulations, 2002. The word cover is defined in Regulation 2(c) so as to mean an insurance contract whether in the form of a policy or a cover note or a Certificate of Insurance or any other form prevalent in the industry to evidence the existence of an insurance contract. The word prospectus as defined in Regulation 2(e) means a document issued by the insurer or in its behalf to the prospective buyers of insurance, and should contain such particulars as are mentioned in Rule 11 of Insurance Rules, 1939 and includes a brochure or leaflet serving the purpose. Such a document should also specify the type and character of riders on the main product indicating the nature of benefits flowing thereupon. Regulation 3, inter alia, provides that, notwithstanding anything mentioned in Regulation 2(e), a prospectus of any insurance product shall clearly state the scope of benefits, the extent of insurance cover and in an explicit manner explain the warranties, exceptions and conditions of the insurance cover. Under Regulation 7

(l) , matters to be clearly stated in general insurance policy are enumerated, and they include, "policy terms, conditions and warranties", under Clause (i), and, "provision for cancellation of the policy on grounds of misrepresentation, fraud, nondisclosure of material facts or non-cooperation of the insured", under Clause

(m) . The provisions of the Act of 1999 and the nature of regulation and control exercised thereunder show that the general insurance business is not left to the exclusive domain of purely a private contract of two individuals not involving any public interest. The constitutional and statutory provisions regulate these insurance contracts and the interest of the community is kept paramount in consonance with the Directive Principles of State Policy.

17.3 The medi-claim Insurance Scheme, which was framed by the G.I.C., was a Scheme approved by the Central Government. It was not a Scheme floated by some private party. This is evident from circular No. 464 dated 18th July, 1986 issued by the C.B.D.T. under Section 119 of the Income-tax Act, 1961, in which, there is a reference to the budget speech in the year 1986-87 of the Finance Minister in which a proposal to provide relief to self-employed persons and salary earners other than those whose medical needs were taken care of by the employers in respect of medical expenses incurred by them by allowing a deduction out of their total income, subject to limits, for any premium, on medical insurance policies taken by them with the General Insurance Corporation of India, was announced. Pursuant to that, a new Clause (ib) in Sub-section (1) of Section 36 of the Income-tax Act, 1961, was inserted, to allow a deduction to an employer in respect of premium paid by him by cheque for insurance on the health of his employees in accordance with a scheme framed in this behalf by the General Insurance Corporation of India and approved by the Central Government. Section 80D was inserted in the Income-tax Act, 1961 to provide a deduction to an assessee upto Rs. 3,000 a year in respect of the insurance premium paid by him by cheque. In Para 4.2 of the circular, it was mentioned that the scheme was being finalised separately. Accordingly, the scheme was finalised which is known as "Hospitalisation and Domicilliary Hospitalisation Benefit Policy" (The said circular is reproduced in Chaturvedi & Pithisarias Income-tax Law, Fifth Edition, Volume 2, at page 1944 and the scheme appears at page 3407 under Section 80D of that volume). Thereafter, Circular No. 537 dated 12th July, 1989 was issued by the C.B.D.T., which is re-produced in [1989] 179 ITR (St.) 1, on the subject of Deduction of Tax at Source during the financial year 1989-90 under Section 192 of the Income-tax Act, 1961 and it will be seen from para (ix) thereof that the said scheme framed by the General Insurance Corporation of India is referred to and it is stated that it was approved by the Central Government and was popularly known as "medi-claim". We had to resort to this exercise of finding out whether this medi-claim insurance scheme was a scheme approved by the Central Government, because, we did not get any assistance throughout the hearing on the genesis of the scheme and perhaps the Insurance Companies themselves were not aware that the scheme which was framed by the G.I.C. was a scheme approved by the Central Government, on an assumption that this fact could not have been deliberately withheld from the Court, if it was to their knowledge.

17.4 It is therefore, difficult to accept the argument that the directive principles of State policy declared under Articles 39 and 47 of the Constitution would not be germane in the context of the insurance business in health-care carried out by these Government Companies when their exclusive privilege was given a go-bye, as was sought to be contended on behalf of the insurer companies.

18. The principal contention canvassed on behalf of the Insurance Companies is that, under Clause 5.9 of the insurance policy, which was a term of the contract of insurance, it was made clear that the medi-claim policy can be cancelled at the option of the insurer without any reason whatsoever, and that it may not be renewed if one of the parties to the contract did not agree to the renewal. Therefore, renewal of medi-claim policy cannot be claimed as a matter of right by the insured. It was also argued that the Insurance Companies have to function on sound business principles and if from the experience gained, the insurer finds that it is not prudent to continue the policy of a particular insured, the insurer can stop it. It was contended that the insurers are justified in taking a prudent commercial decision and refusing to insurer a person in respect of the diseases developed by him during the operative period of the existing policy and are also justified in refusing to renew the policy."

36. In the said judgment, the Division Bench, after taking note of the requirement of medi-claim policy in the modern scenario has noted as under:-

27. Following aspects clearly emerge from the above Clauses 1.1, 4.1, 4.2, 4.3 and 7 of the medi-claim insurance policy and Clause 11 of the prospectus of the medi-claim insurance policy that: (i) the cover for the diseases which are not excluded from the first year of the cover would continue even in the renewal years if the renewal premium was paid in time; (ii) even if the insured contracts any disease which is not excluded from the existing cover, it will be continued to be covered in the subsequent year, if the renewal premium is paid in time; (iii) the disease covered under the policy will not be excluded during the continuance of the cover.

A fortiori, the renewal could not be refused if insured paid the renewal premium in time.

28. The expression "policy may be renewed by mutual consent" and "the company may at any time cancel this policy" occurring in Clause 5.9 of the policy and Clause 14 of its prospectus cannot be resorted to by these Government companies for urging that they can arbitrarily put an end to the medi-claim policy or arbitrarily refuse to accept renewal premium which is tendered in time. These Government companies being "State" under Article 12 are under a constitutional obligation to act reasonably and without any arbitrariness even in the matter of contract. The stipulation regarding renewal by mutual consent will, therefore, apply to cases where the Government Insurance Company is not obliged under the existing policy to continue the cover on payment of the renewal premium in time. The disease covered by the insurance during the continuance of the policy by renewal can never by itself become the ground for refusing renewal when the disease surfaces and creates the obligation to the extent of the sum insured under the cover which cover is required, as per the stipulation, "to be continued on payment of the renewal premium in time". Happening of the event which may give rise to a claim under the policy cannot be a ground for cancelling the cover. A party to the contract cannot disown the liability under the contract by cancelling it. The insurer is under a duty to accept the renewal premium paid in time because of the standing offer to renew implied in various clauses of the policy and expressly stipulated under Clause 11 of the prospectus, which standing offer can be accepted by timely payment of the renewal premium. The cancellation Clause 5.9 of the policy stating that the policy may be cancelled by giving 30 days notice will have to be read in the context of the grounds mentioned in Regulation 7(1)(m) of the Protection of Policy Holders Interests Regulations, 2002, which provides that cancellation can be made only on grounds of misrepresentation, fraud, nondisclosure of material facts or non-cooperation of the insured.

34.4 In the contract of insurance, the term "renewal" is used to denote both extension of the original period of cover by the exercise of a right given to the insured by the contract to extend the period of cover without the assent of the other, and the making of a new contract through the agreement of both. It is important to distinguish the two types of renewal, since only in the former case, will vitiating elements in the original contract, such as, failure to make full disclosure affect the extension, and conversely only in the later case will a duty arise to make full disclosure, at the time of renewal. Where the insurance (e.g., life insurance) gives the assured the right to renew automatically on the payment of a further premium at the end of the first period, such renewal does not constitute a new contract - Chitty on Contracts, 24th Edition, Para 3941 at page 707

34.5 The health insurance contract is related to the category of like contracts. A life contract would obviously include the natural process of dying and a health insurance contract would obviously include what may be inevitable illness, which perils would be covered by the insurance. In a normal contract of life assurance as distinct from contracts intended to be for a term certain, the assured must have, at least, a right of renewal subject to reasonable conditions. A policy of health insurance is for insuring against the risk of disease. One is a policy for life while the other for a healthy life. Even in a health policy, though under an annual contract on payment of annual premium, the assured must have a right of renewal subject to reasonable conditions, because, the policy is not intended to be for a term certain, but meant to cover the risk of disease for life so long the renewal premium is paid in time, as per the renewal clause. The contract of health insurance, like that of life insurance made in consideration of an annual premium, is an insurance for a year with an irrevocable offer to renew upon payment of the agreed renewal premium.

37. Our above reasoning, which is the context of the medi-claim insurance scheme approved by the Central Government, floated by the G.I.C., and implemented by the Government Companies, draws its full vigour from the decision of the Honble the Supreme Court in Biman Krishna Boses case (supra), in which the Supreme Court, while considering the medi-claim Insurance Policy, holding that these Insurance Companies were "State" under Article 12 of the Constitution, in terms, further held in Paragraph 5 of the judgment that, the renewed contract was on the same terms and conditions as that of the original policy, and that if a view was taken that by medi-claim policy cannot be renewed with retrospective effect, it would give handle to the Insurance Company to refuse the renewal of the policy on extraneous considerations thereby deprive the claim of the insured for treatment of diseases which have appeared during the relevant time, and further deprive the insured, for all time to come, to cover those diseases under an insurance policy by virtue of the exclusion clause. It was held that this being the disastrous effect of wrongful refusal of renewal of the insurance policy, the mischief and harm done to the insured must be remedied. The Court held that, once it is found that the act of the 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. Earlier, in Paragraph 3 of the judgment, the Court held that, even in an area of contractual relations, the State of its instrumentalities are enjoined with the obligations to act with fairness and in doing so, can take into consideration only the relevant materials. They must not take any irrelevant and extraneous consideration while arriving at a decision. Arbitrariness should not appear in their actions or decisions. The Court agreed with the view taken by the High Court that the order of the Insurance Company refusing to renew the medi-claim policy of the appellant was unfair and arbitrary. It is clear from the judgment that its ratio is directed against all arbitrary of unfair refusals to renew the medi-claim policy. The fact that, in the case before the Supreme Court, the ground for refusal was extraneous, will not reduce the impact of the decision from the level of setting aside any arbitrary and unfair order to merely applying it to a particular instance where refusal is on some extraneous consideration, such as, approaching the Consumer Forum.

37. Following the aforesaid view, the Delhi High Court has issued writ of mandamus in the case of Mukut Lal Duggal vs. United India Insurance Co. Ltd.: 117 (2004) Delhi Law Times 74 [LQ/DelHC/2004/179] . In the case of United India Insurance Company Ltd. vs. Manubhai Dharmasinghbhai Gajera and ors: 2008 (10) SCC 404 (supra) has recognized the power of judicial review and enforcement of terms and conditions of insurance policy. In the case of Hari Om Agarwal vs. Oriental Insurance Co. Ltd. AIR 2008 (Delhi) 29 has held that the rights and liabilities under medi-claim policies and disputes arising from the same can be adjudicated in writ jurisdiction also. Similar view has been taken by the High Court of Punjab and Haryana in the case of IFFCO TOKIO General Insurance Company Ltd. vs. Permanent Lok Adalat (Public Utility Services), Gurgaon and others: 2013 ACJ 1478. [LQ/PunjHC/2011/3349] Patna High Court has also examined the claim relating to medi-claim Policy in the case of Usha Jhunjhunwala vs. Oriental Insurance Company Ltd., 2014 (8) RCR (Civil) 1506 (Patna).

38. In view of above, the objections raised by the respondents are rejected.

39. Accordingly, the writ petition is allowed. The respondents are directed to release the claims due to the petitioner for the various years under the Medi-claim Policy which has been renewed from time to time and for which premium has been paid by the petitioner. Interest @ 9% per annum on the claims due shall also be paid to the petitioner by the respondents.