Mad HC | Writ petition to enforce a contractual right of insurance claim against a private insurance company – maintainable, when action of the company has public law character

Madras High Court: Pushpa Sathyanaryana, J. while hearing a petition praying for mandamus against an insurance company, directed the said insurance company to honour the claim of petitioner in respect of her insurance policy.

Petitioner and her husband had applied for a home loan for which they were to be sanctioned a sum of Rs 35,00,000. The loan policy also covered critical illness diagnosis cost. Petitioner’s husband suffered a massive cardiac arrest and died. Petitioner filed a claim petition seeking claim amount but it was denied on grounds that her husband’s death was not covered under major medical illness. Aggrieved thereby, the instant petition was filed.

Learned counsel for the petitioner S.R. Raghunathan argued that the respondent’s argument which stated that massive cardiac arrest did not come under the purview of major medical diagnosis was absolutely false. They were just trying to save themselves from providing rightful insurance claims. He relied on the case of LIC of India v. Asha Goel, (2001) 2 SCC 160 to buttress his argument.

Learned counsels for the respondents S. Manohar and K.J. Parthasarathy contended that the respondent company was not “State” under Article 12 of Constitution of India and therefore the writ petition was not maintainable under law. Secondly, they alleged that the cause of death did not fall within the covered claims.

Issue: Whether a writ petition is maintainable to enforce a contractual right of an insurance claim?

The Court opined that Article 226 of the Constitution of India could be invoked not only for infringement of fundamental rights but also for any other purpose. Thus, the question that required determination was whether private bodies performing public duties can be brought within the purview of judicial review. It considered the judgment in LIC v. Escorts Ltd., (1986) 1 SCC 264 where the Supreme Court while considering activities of LIC, which comes under the purview of public law, observed that “a Court will examine actions of State if they pertain to the public law domain and refrain from examining them if they pertain to the private law field…. The question must be decided in each case with reference to the particular action”.

The Court remarked that notwithstanding the law on the subject, in reality, there is no parity and balance between the insurer and insured. In many cases, the individual has no legal knowledge about the ambiguous language used in the company’s policy with an intention to waive them from the liability to pay the injured on happening of an agreed event. Many times the companies willfully neglect reimbursing the insured, who instead of getting their amount from the company have to pay the Courts for getting their rights enforced. The case on hand is the classic example of the same.”

 It was opined that the “malpractice and arbitrary use of power by the insurance companies must be restrained by incorporating provisions to reduce the chances of ambiguity at a later date. Or else, the insurer would continue to take advantage of the insured by falsely repudiating the claims made by the insured”.

It was noted that as per Section 3 of the policy in question the medical event of ‘Myocardial Infarction’ was covered under the Policy. Though the cardiac arrest suffered by the husband of the petitioner fell under the abovesaid medical event, the respondents were denying the rightful claim to the insurance cover. The Court asked for a medical report to clear the doubt whether massive cardiac arrest comes under major medical diagnosis, and after a perusal of the said report, it was concluded that the cause of death of the insured was well within the defined medical events prescribed in the policy.

As a concluding remark, the Court urged that insurance companies must focus on educating their customers about the financial backing and this must be done by issuing magazines, booklets and visual contents.

The petition was allowed and the respondent company was directed to honour the claim made by the petitioner without insisting for any further documentation or particulars, in accordance with the law.[Jasmine Ebenezer Arthur v. HDFC ERGO General Insurance Company Ltd., 2019 SCC OnLine Mad 2246, decided on 06-06-2019]

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