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2024 Supreme(Online)(Bom) 6817
HIGH COURT OF BOMBAY
M.S. Sonak, Jitendra Jain, JJ
BHARAT HIRJI DEDHIA – Appellant
Versus
UNION OF INDIA AND ANR – Respondent
WP/2903/2021
The Insurance Ombudsman’s award is binding, and failure to comply within the stipulated time constitutes a breach of regulatory obligations, warranting costs and interest.
Headnote:(A) Insurance Regulatory and Development Authority Notification dated 25 April 2017 - Jurisdiction of Insurance Ombudsman - The Ombudsman’s award directing payment of Rs.27,13,582/- to the insured was upheld, as the Insurance Company failed to comply with the award within the stipulated time and raised frivolous challenges. (Paras 25, 36, 71)
(B) Conduct of Insurance Company - The court strongly criticized the Insurance Company for its delay in compliance, suppression of documents, and harassment of the insured, emphasizing accountability for public authorities. (Paras 24, 55, 68)
Facts of the case:
The Insurance Company challenged the Ombudsman’s award directing payment for health insurance, claiming the policies were void due to pre-existing conditions, while the insured contended the award was justified and binding. (Paras 5, 6, 10)
Findings of Court:
The court found the Insurance Company’s arguments unmeritorious and upheld the Ombudsman’s award, ordering compliance with costs and interest. (Paras 56, 71)
Issues: The main issues included the validity of the insurance policies, the Ombudsman’s jurisdiction, and the conduct of the Insurance Company in delaying payment. (Paras 10, 44, 56)
Ratio Decidendi: The court ruled that the Ombudsman acted within jurisdiction, and the Insurance Company’s failure to comply with the award constituted a breach of regulatory obligations, warranting costs and interest. (Paras 36, 50)
Result: Writ Petition No.706 of 2024 dismissed; Writ Petition No.2903 of 2021 allowed with costs and interest. (Paras 71)
| Table of Content |
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| 1. background of the case (Para 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54 , 55 , 56 , 57 , 58 , 59 , 60 , 61 , 62 , 63 , 64 , 65 , 66 , 67 , 68) |
JUDGMENT ( P er MS Sonak J) :-
1. Heard learned counsel for the parties. Rule in both these Petitions. The Rule is made returnable immediately at the request of and with the consent of the learned counsel for the parties.
2. Interim Application No.424 of 2022 seeking leave to amend Writ Petition No.706 of 2024 is allowed. Amendment to be carried out immediately. Reverification is dispensed with.
3. Learned counsel for the parties agree that a common order can dispose of both these Petitions. In any event, Writ Petition No.2903 of 2021 seeks to implement the Insurance Ombudsman’s award dated 03 May 2021 and Writ Petition No.706 of 2024 questions the same award dated 03 May 2021.
4. The learned counsel for the parties submitted that Writ Petition No.706 of 2024 be considered first because the fate of Writ Petition No.2903 of 2021 would depend upon the decision in Writ Petition No.706 of 2024. This is correct, and the suggestion of the learned counsel for the parties is accepted.
5. In Writ Petition No.706 of 2024, the Oriental Insurance Company Limited (“Insurance Company”) challenges the Insurance Ombudsman’s award dated 03 May 2021, directing the Insurance Company to pay to Bharat Dedhia (the second Respondent and the Petitioner in Writ Petition No.2903 of 2021) an amount of Rs.27,13,582/- against the health insurance policy taken by Bharat Dedhia (“Bharat”) from the Insurance Company.
6. Ms Dwivedi, the learned counsel for the Insurance Company, submitted that the Ombudsman exceeded the scope of its jurisdiction in making the impugned award. Therefore, she submitted that the award is illegal, arbitrary, unconstitutional, and without jurisdiction.
7. Ms Dwivedi submitted that Bharat had submitted a proposal form (self-declaration form) based upon which the health insurance policies or at least the additional health insurance policies were issued to Bharat. She submitted that in this proposal form, Bharat had referred to the ischemic heart disease contacted by him on 14 May 2016 and the fact that he was suffering from diabetes mellitus. She submitted that given these proposals/self- declaration forms and the information contained therein, there was no question of offering any health insurance to Bharat.
8. Ms Dwivedi submitted that though, factually, premia were accepted by the Insurance Company and even health insurance policies were issued, the acceptance of such proposal by the Insurance Companies was void. The health insurance policies based upon such acceptance were also void. She submitted that the Ombudsmen should have rejected Bharat’s claim at the threshold since the health insurance policies were void.
9. Without prejudice, Ms Dwivedi submitted that in terms of the Insurance Regulatory and Development Authority’s (“IRDA”) Notification dated 25 April 2017, the Insurance Ombudsman’s functions and duties relate to receiving and considering complaints or disputes relating to partial or total repudiation of the claims by the Life Insurer, General Insurer or Health Insurer.
10. Ms Dwivedi submitted that there was no repudiation of the claim in this case, and the Insurance Company offered to pay Rs.5,00,000/- towards the full and final settlement of Bharat’s claim. Accordingly, she submitted that the Insurance Ombudsman had no jurisdiction to consider Bharat’s complaint or dispute. She submitted that such consideration by the Ombudsman was beyond the jurisdiction conferred upon the Ombudsman under Clause 13 of the IRDA’s Notification dated 25 April 2017. She maintained that the impugned award should, therefore, be set aside as exceeding the jurisdiction vested in the Ombudsman.
11.
