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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
K.V. ARAVIND, J.
M/S. TOYOTA KIRLOSKAR MOTOR PVT. LTD. – Petitioner
Versus
THE INSURANCE OMBUDSMAN FOR THE STATE OF KARNATAKA – Respondent
Writ Petition No. 4160 of 2019
Decided On : 04-07-2024
Natural Justice - Employer Rights - Insurance Ombudsman Rules - The court emphasized the necessity of providing an opportunity to the employer in proceedings under the Insurance Ombudsman Rules, highlighting the principles of natural justice and their application in administrative actions involving civil consequences.
Fact of the Case:
The petitioner, a vehicle manufacturing company, sought a writ of mandamus to ensure its participation in proceedings before the Insurance Ombudsman regarding employee claims under a Group Personal Accident Policy, arguing that its financial interests were affected by the claims made by employees.
Finding of the Court:
The court found that the employer, as a contributor to the insurance premium, has a right to be heard in the proceedings before the Insurance Ombudsman, as the outcome could have significant financial implications for the employer.
Issues: Whether the employer is entitled to be heard in proceedings before the Insurance Ombudsman under the Insurance Ombudsman Rules, 2017, given that the rules do not explicitly provide for such a right.
Ratio Decidendi: The court held that principles of natural justice, particularly the right to be heard, must be read into the Insurance Ombudsman Rules, as the employer's financial interests are significantly impacted by the claims made by employees.
Result: Writ petition allowed in part; the Insurance Ombudsman must notify the employer before passing any award.
ORDER :
1. This writ petition seeking the following prayers:
(b) Further issue a writ in the nature of certiorari or any other writ or order and quash the Award bearing No. 10/BNG/A/G1/0314/2018-19 dated 02.01.2019 passed by the first respondent at Annexure 'F' to this writ petition; and
(c) Pass such other appropriate order as deemed fit to grant in the facts and circumstances of the case, in the interest of justice.”
2. The petitioner is a company engaged in manufacture of motor vehicles. The petitioner has contracted “Group Personal Accident Tailor Made Policy” with respondent No. 2- United India Insurance Company Limited to cover all the employees of the company when they suffer bodily injuries. The benefit is available even in case of death of an employee. It is stated that the policy would cover injuries suffered even beyond working place and hours. The benefit is available even to death cases outside working place.
3. The premium is negotiated by the petitioner with the Insurance Company on the basis of the claims made by the employees in the previous year. Depending on the amount of compensation paid by the Insurance Company in the previous year, the Insurance Company would calculate, negotiate and fix the premium for the next year.
4. The employees directly make a claim with the Insurance Company. The Insurance Company on examination of the reports would determine the compensation to be payable. In the event of any dispute with the compensation determined by the Insurance Company, the employee would file a claim before the Ombudsman under the Insurance Ombudsman Rules, 2017 (hereinafter referred to as 'Rules, 2017'). The Ombudsman after considering the claim made by the employee, documents in support of such claim and the contentions of the Insurance Company would determine the compensation to be payable.
5. It is the specific case of the petitioner that, the petitioner is a stakeholder incurring civil liability. The petitioner should be provided an opportunity before the Ombudsman.
6. Learned Senior counsel Sri. S.N. Murthy appearing on behalf of Sri.Somashekar, learned counsel for the petitioner submits that premium towards insurance policy is contributed by the petitioner. The premium for the next year is determined by the Insurance Company on the basis of the quantum of compensation disbursed in the previous year, the petitioner is necessary party before the Ombudsman. It is submitted that there are instances of incorrect, fake or high compensation being claimed by the employees on the basis of unreliable and unverified documents. In such situation, due to the said wrong claims of the employees, the petitioner is suffering in the form of contributing higher premium. The insurance benefit is provided to the employees for their genuine claims. In view of certain employees making abusive claims, the same can be avoided by providing an opportunity before the Ombudsman. The presence of the petitioner before the Ombudsman would be for the welfare of the employees and in the interest of Insurance Company as well and the object and purpose of extending insurance benefit would be achieved.
7. Learned Senior counsel appearing for the petitioner submits that though the petitioner has raised contentions with reference to the manner of quantification of the award and the quantum of award itself is in dispute, the same is not being pressed in the present petition.
Submission is placed on record.
8. Respondent No. 1 is served and unrepresented.
9. Sri Janardhan Reddy, learned counsel for respondent No. 2 submits that the presence of employer before respondent No. 1-Insurance Ombudsman would not prejudice the rights of any of the parties. In fact, the same would assist the Insurance Company in avoiding any fake or incorr
The court established that the principles of natural justice require that an employer, as a stakeholder in insurance claims, must be given an opportunity to be heard in proceedings before the Insuran....
The Insurance Ombudsman acted within jurisdiction, and the Insurance Company must comply with the award, emphasizing accountability for delays and suppression of documents.
The court clarified that the monetary limit in the Insurance Ombudsman Rules applies to compensation, not to the claims themselves, allowing for broader jurisdiction.
An insurance policy lapses if the premium is not paid within the grace period; revivals after the insured's death are impermissible under contract terms.
A lapsed insurance policy cannot be revived post-death, and the Insurance Ombudsman lacks authority to bypass contract terms based on equity.
The Insurance Ombudsman can only award compensation under regulatory rules and lacks authority to mandate policy issuance at prior premiums.
The Insurance Ombudsman lacks jurisdiction to adjudicate complaints concerning policies from proprietorships or commercial lines, as these do not fall under personal lines as defined by relevant rule....
Natural justice is flexible, requiring context-specific application, with emphasis on actual prejudice caused to uphold procedural fairness in administrative decisions.
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