Gujarat High Court
Rupen N Desai vs Insurance Ombudsman (Gujarat) & on 25 September, 2017
Author: N.V.Anjaria
Bench: N.V.Anjaria
C/SCA/1068/2007 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 1068 of 2007
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE N.V.ANJARIA
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ? No
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy of
the judgment ? No
4 Whether this case involves a substantial question of
law as to the interpretation of the Constitution of No
India or any order made thereunder ?
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RUPEN N DESAI....Petitioner(s)
Versus
INSURANCE OMBUDSMAN (GUJARAT) & 1....Respondent(s)
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Appearance:
MR VIMAL M PATEL, ADVOCATE for the Petitioner(s) No. 1
MS AMRITA M THAKORE, ADVOCATE for the Petitioner(s) No. 1
(MR PV NANAVATI), ADVOCATE for the Respondent(s) No. 1
MR GC MAZMUDAR, ADVOCATE for the Respondent(s) No. 2
MR HG MAZMUDAR, ADVOCATE for the Respondent(s) No. 2
MR VIBHUTI NANAVATI, ADVOCATE for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE N.V.ANJARIA
Date : 25/09/2017
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C/SCA/1068/2007 CAV JUDGMENT
CAV JUDGMENT
Heard learned advocate Ms.Amrita Thakore for the petitioner and learned advocate Ms.Masumi Nanavati for the respondent No.1 insurance company. Learned advocate Mr.G.C. Mazmudar appears for respondent No.2.
2. By filing the present petition, the petitioner has challenged judgment and award dated 21st July, 2006 passed by the Insurance Ombudsman in Case No.11-002-0348 praying to set aside the same. By the said judgment and award, the said authority allowed Rs.83,000/- under the medicalim policy upholding the decision of the respondent - Insurance Company against the claim of the petitioner to pay a sum of Rs.04,15,499/-. While praying to set aside the order of the insurance ombudsman as above, the petitioner has consequently prayed to set aside action on part of respondent No.2 - The New India Assurance Company Limited in partially repudiating the claim of the insured as per its letters dated 08th November, 2005, 09th January, 2006 and 28th February, 2006 and to allow the payment of total claim as put-forth.
3. The relevant facts and events may be highlighted. In the year 1987-88 late Shri Navin Desai took a mediclaim policy from respondent Insurance Company which was renewed for 18 years. Initially, the sum insured was Rs.83,000/-. Clause 4.1 of the policy provided for exclusion of diseases pre-existing when the cover incepted for the first time. During the policy period, approximately 12 years back, the insured started suffering from hypertension and high Page 2 of 8 HC-NIC Page 2 of 8 Created On Sat Oct 07 06:38:56 IST 2017 C/SCA/1068/2007 CAV JUDGMENT blood pressure. In 1997-98 the sum insured under the policy was enhanced to Rs.03,00,000/-.
3.1 On 30th May, 2003 the respondent No.2 Company sought information on how long the insured had suffered from high blood pressure and IHD. The insured informed respondent No.2 on 18th June, 2003 that he had high blood pressure since last 8-9 years and IHD since last 2 years.
3.2 In July, 2003 the respondent Insurance Company granted the insured's claim for expenses incurred on Right Hemiplegia during the policy period 2002-03. Thereafter the policy was renewed upto 2005- 06, which was without exclusion of any diseases. During 06th June, 2005 to 08th July, 2005 the insured was hospitalised for treatment of Cerebro-Vascular Accident, Left Hemiplegia and Thrombosis. Although the policy had become a cashless one, on account of some disputes between the Third Party Administrator (TPA) of the respondent No.2 and the hospital, cash payment had to be made for the treatment. The insured passed away on 01st November, 2005. The petitioner filed a claim of Rs.04,15,499/- under the policy.
3.3 Respondent No.2 Insurance Company, through TPA, repudiated the claim on 08th November, 2005 on the ground that the policy was in the 11th year and that hypertension was existing for more than the period of the policy, that it was a pre-existing disease. It was further stated that Left Hemiplegia had direct relation with hypertension and was a complication of Page 3 of 8 HC-NIC Page 3 of 8 Created On Sat Oct 07 06:38:56 IST 2017 C/SCA/1068/2007 CAV JUDGMENT the pre-existing disease. The petitioner therefore pointed out on 14th November, 2005 that the policy was in its 18th year and the insured had been suffering from hypertension since 10-12 years and the said disease was therefore within the policy period.
3.4 On 09th January, 2006 the respondent No.2, however, without giving reason, once again repudiated the claim stating that the amount of Rs.02,99,299/- was not payable and only Rs.01,16,200/- were payable. On 15th February, 2006 the petitioner again pointed out that on the facts stated, claim could not be repudiated when the earlier claim had been granted and there was no exclusion/restriction in the policy. The TPA replied on 28th February, 2006 that the previous claim was within Category B-1, that is, amount of Rs.83,000/- and the present claim was also being satisfied to the extent of Category B-1 and that, for the enhanced amount, hypertension had to be treated as pre-existing. The TPA further stated that the policy had been enhanced accordingly. The petitioner therefore filed a complaint before the Insurance Ombudsman. However, the said complaint was also rejected as per impugned order dated 21st July, 2006.
4. Learned advocate for the petitioner emphasised that there was a non-exclusionary clause in the insurance and that the claim was earlier cleared by the company. On the other hand, learned advocate for the respondents heavily relied on the affidavit- in-reply to submit on various grounds that against the order of the Insurance Ombudsman, this Court may not Page 4 of 8 HC-NIC Page 4 of 8 Created On Sat Oct 07 06:38:56 IST 2017 C/SCA/1068/2007 CAV JUDGMENT exercise power of judicial review. It was also sought to be contended that the petitioner may be relegated to consumer court to seek necessary relief.
4.1 Against the aforesaid submission of not exercising judicial review power, learned advocate for the petitioner relied on decision in United India Insurance Company Limited v. Manubhai Dharamsinhbhai Gajera [(2008) 10 SCC 404], in particular relying on observations in paragraphs 60 and 61 of the judgment, which observed that judicial review in respect of claims against insurance company was permissible. It was observed that the High Court was concerned with the interpretation of the contract and that such cases do not involve serious disputed questions of fact. Another decision of Division Bench of this Court in United India Insurance Company Limited v. Mohanlal Aggarwal [2004 (1) GLR 637] was pressed into service for its paragraphs 17 to 22 wherein it was highlighted by the Court that insurance companies discharge statutory duty to carry on the general insurance business under General Insurance Business (Nationalisation) Act, 1972 so as to secure the best advantage for the community. It was observed that insurance companies are statutorily controlled companies which are State within the meaning of Article 12 of the Constitution and they cannot be allowed to function arbitrarily in doing their general insurance business and treating the claims of the policy holders.
5. In view of the above, it is clear that the Page 5 of 8 HC-NIC Page 5 of 8 Created On Sat Oct 07 06:38:56 IST 2017 C/SCA/1068/2007 CAV JUDGMENT insurance companies are "other authorities" within the ambit of Article 12 of the Constitution and they are amenable to the writ jurisdiction of the High Court under Article 226 of the Constitution. They are enjoy to act just, fair, reasonable and non-arbitrary manner in conducting their insurance business and dealing with the claims of insurance. In Biman Krishna Bose v. United India Insurance Co. Ltd. [(2001) 6 SCC 477] the Supreme Court elaborated as to how the insurance companies have trappings of "the State" being "other authorities" under Article 12 of the Constitution. It was further observed that the insurance companies must not take any irrelevant or extraneous consideration while arriving at the decision.
6. Now, looking to the order of the Insurance Ombudsman, it appears that the Ombudsman has blindly accepted the decision of the Insurance Company without application of mind to the facts of the case. It observed that there was no dispute about factum of hospitalisation of the insured from 06th June, 2005 to 08th July, 2005 who was admitted in Krishna Medisurge Hospital. It was also an admitted position that the period of hospitalisation was within the currency of the policy period. The insured was treated at the hospital during the said period for Hemiplegia, Cerebro-Vascular Stroke & Thrombosis, for which also there is no dispute. The insured held mediclaim policy since last 19 years. The Ombudsman however committed error in reasoning that though the sum insured was enhanced, the restriction as applicable to fresh policy will apply to the additional sum as if the Page 6 of 8 HC-NIC Page 6 of 8 Created On Sat Oct 07 06:38:56 IST 2017 C/SCA/1068/2007 CAV JUDGMENT separate policy was issued for the same. The Ombudsman stated that the insured had been suffering from hypertension and high blood pressure since prior to 1997 and that the restriction of the pre-existing diseases would apply to the enhanced sum insured and the sum insured could not have been allowed beyond Rs.83,000/-.
6.1 From the record it becomes very clear that the policy dated 11th April, 2005 which covered the period of hospitalisation of the insured (Page 27, Annexure-F) which mentioned "subject to the exclusion of none" implying thereby that no disease was excluded. Therefore, there was no exclusionary clause in the policy under which the claim was lodged and grantable for the treatment received by the insured. Not only that, in the year 2003 respondent No.2 had accepted and settled the claim for Right Hemiplegia. By its own conduct, the Insurance Company had therefore admitted the claim for the very disease under the very policy. Therefore, the impugned decision could hardly sustain on merits when the Insurance Company partially repudiated the claim though it was covered under the policy. As the exclusion clause in the policy schedule specifically mentions "none", no exclusion can be inferred by the Insurance Company so as to defeat the claim, more particularly when despite the respondents being aware, such exclusionary clause was not provided and no disease was excluded.
6.2 It also militates against the rationality Page 7 of 8 HC-NIC Page 7 of 8 Created On Sat Oct 07 06:38:56 IST 2017 C/SCA/1068/2007 CAV JUDGMENT that having accepted in the year 2003 the claim of the insured for Right Hemiplegia, subsequent impugned claim for Left Hemiplegia was repudiated by treating it as pre-existing disease not covered under the policy. The decision of the Insurance Company and the acceptance thereof by the Ombudsman were manifestly arbitrary, irrational and in breach of Article 14 of the Constitution.
7. As a result, the petition is allowed. The action of respondent No.2 - The New India Assurance Company Limited in partially repudiating the claim of the petitioner - insured as per its letters dated 08th November, 2005, 09th January, 2006 and 28th February, 2006 is hereby set aside. The decision reflected in the said letters is quashed. It is declared that the petitioner is entitled in respect of his claim and respondent No.2 is directed to allow the claim by paying to the petitioner Rs.04,15,499/- within a period of four weeks from the date of receipt of this order. The petitioner shall be paid cost of Rs.05,000/- in addition to the aforesaid amount. It is further observed that if the aforesaid amount along with cost is not paid within the time of four weeks stipulated above, respondent No.2 shall be liable to pay the same with interest at the rate of 6%, to be calculated from the date of filing of the petition till actual payment.
Rule is made absolute in the aforesaid
terms.
(N.V.ANJARIA, J.)
Anup
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