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IN THE HIGH COURT OF JAMMU AND KASHMIR AND LADAKH AT SRINAGAR
WASIM SADIQ NARGAL, J.
Union Territory of Jammu and Kashmir – Petitioner
Versus
IFFCO-TOKIO, General Insurance Company Limited – Respondent
A.A. No. 01 of 2024
Decided On : 02-02-2024
Arbitration and Conciliation Act - Insurance Contract - 9
Fact of the Case:
The petitioner sought interim protection under Section 9 of the Arbitration and Conciliation Act, 1996, to restrain the respondent from terminating an insurance contract. The contract was for a maximum of three years, subject to renewal after 12 months, and the respondent expressed intent to terminate the contract after two years. The petitioner argued that the termination was arbitrary and against public interest.
Finding of the Court:
The court found that the insurance contract was determinable and not specifically enforceable under Section 14 of the Specific Relief Act. Therefore, no injunction could be granted to prevent the termination of the contract. The court dismissed the petition under Section 9 of the Arbitration and Conciliation Act, holding it to be without merit.
Issues: The issues revolved around the validity of the termination of the insurance contract, the applicability of Section 9 of the Arbitration and Conciliation Act, and the enforceability of the contract under the Specific Relief Act.
Ratio Decidendi: The court held that a determinable contract, such as the insurance contract in question, cannot be specifically enforced under Section 14 of the Specific Relief Act. Therefore, no injunction could be granted to prevent the termination of the contract. The court also emphasized that the observations made in the order were only a prima facie evaluation and not binding on the Arbitral Tribunal.
Final Decision: The petition under Section 9 of the Arbitration and Conciliation Act, 1996 was dismissed as without merit.
JUDGMENT :
WASIM SADIQ NARGAL, J.
1. The petitioner vide the present petition under Section 9 of the Arbitration and Conciliation Act, 1996 (Hereinafter referred to as the ‘The Act’) has sought the following reliefs:
(B) Respondents be directed to continue the contract upto 14.03.2025 in the interest of patient care and public at large.
(C) Pass order in favour of Petitioner and against the Respondent, thereby directing the respondent to undertake its contractual liability and in the interest of patient care, which otherwise at this stage would have serious consequences for the people of the U.T. of J&K as approximately 1200-1500 procedures take place daily in the Union Territory of Jammu and Kashmir and the general publicheavily relies on these schemes for adequate treatment, leading to improved and well-organized patient care.
(D) Any Writ, order or direction quashing the letter dated 01.11.2023 of respondents.
(E) Pass any order in favour of Petitioner and against the Respondent, thereby directing the respondent to accept the Premium as per the terms of the Policy for a further period of one year beginning from 15-03-2024 till 14-03-2025 and thus restraining the Respondent from removing the blanket cover of insurance from 14-03-2024 onwards.
(F) Any other relief, which this Hon'ble Court may deem fit and proper as per the facts and circumstances of the case.
Factual Matrix
2. The following course of events have culminated into the present dispute between the parties and has also led to the filing of the instant petition.
3. Briefly put, the facts in the present petition appear to be that the insurance contract between the Petitioner and Respondent was executed for a maximum period of three years, commencing from 10th of March, 2022. Ordinarily, the contract agreement would have subsisted till 14th March, 2025, however, IFFCO-TOKIO, General Insurance Company (Hereinafter, Respondent Company) in their letter dated 1st November, 2023 informed that they would like to serve a notice expressing that they are not interested in further renewing the contract after the expiry of the present policy, which ends on 14th March, 2024 as per Clause 9.1(c) of the contract agreement dated 10th March, 2022.
4. In response to the aforementioned communication by respondent Company, the Chief Executive Officer, State Health Agency, J&K (Hereinafter, CEO, SHA, J&K), vide communication dated 3rd November, 2023 addressed to the CEO/MD of the Respondent Company, requested them to continue as insurer in terms of the Memorandum of Understanding (MOU) signed between the parties. The General Manager of the Respondent Company, in response to this request, informed the CEO, SHA, J&K vide communication dated 16th November, 2023 that they have decided not to accord their consent for the renewal of the contract beyond 14th March, 2024. In the aforesaid communication, the respondent company noted that SHA, J&K has enough time to make alternative arrangements with the view to prevent the beneficiaries from suffering on account of interpretation of the contract.
5. Subsequently, there were multiple correspondence exchanges between the SHA and the Respondent Company, whereby, the SHA requested the company to honour the terms and conditions of the contract. The Respondent Company replied stating that they are merely invoking clause 9.1 (c) of the contract agreement and in no way are in breach of the terms of the contract.
6. The SHA, J&K, then invoked clause 41.3 of the contract agreement vide communication dated 19thJanuary, 2024 and served notice to the Respondent Company for referring the matter to the Arbitral Tribunal requesting them to nom
A determinable contract, such as an insurance contract subject to renewal, cannot be specifically enforced under Section 14 of the Specific Relief Act, and no injunction can be granted to prevent its....
A contract that is determinable in nature cannot be specifically enforced, and no injunction against termination and enforcement of the contract can be issued.
A contract with specific termination conditions is not inherently determinable under Section 14 of the Specific Relief Act, allowing for interim relief to maintain status quo pending arbitration.
The court upheld the rejection of an interim injunction under the Arbitration Act due to the appellant's failure to establish a prima facie case and balance of convenience.
The main legal point established in the judgment is that in the case of a determinable contract, no injunction against termination and enforcement of the contract can be issued.
Point of Law : Section 41(e) of the Specific Relief Act would get attracted which provided that no injunction can be granted to prevent breach of contract, the performance of which is not specificall....
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