Case Note & Summary
The case involves a dispute between Bharat Hirji Dedhia (the insured) and Oriental Insurance Company Ltd. (the insurer) regarding a health insurance policy. Bharat had taken a health insurance policy from the insurer and subsequently underwent coronary artery bypass surgery at Breach Candy Hospital, paying Rs.21,87,500/- as surgeon's fees to Dr. Sudhanshu Bhattacharyya. He filed a claim for the same, but the insurer offered only Rs.5,00,000/- as full and final settlement, which Bharat considered a partial repudiation. Bharat then approached the Insurance Ombudsman, who on 3 May 2021 passed an award directing the insurer to pay Rs.27,13,582/-. The insurer challenged the award in Writ Petition No.706 of 2024, while Bharat filed Writ Petition No.2903 of 2021 seeking enforcement. The court first considered the insurer's challenge. The insurer argued that the Ombudsman lacked jurisdiction because there was no repudiation, only an offer of settlement, and that the policy was void due to non-disclosure in the proposal form. The court rejected these arguments, holding that the offer of Rs.5,00,000/- against the claim amounted to partial repudiation, giving the Ombudsman jurisdiction under the IRDA Notification. The court also noted that the insurer had accepted premiums and issued the policy, and the proposal form was unsigned, so the insurer could not later challenge the policy's validity. On the quantum, the court found that the award was based on evidence of actual payment and was within the policy terms, and the insurer's comparison with other patients was not sufficient to reduce the claim. The court dismissed the insurer's petition and allowed Bharat's petition, directing the insurer to comply with the award within four weeks.
Headnote
A) Insurance Law - Jurisdiction of Insurance Ombudsman - Partial Repudiation - IRDA Notification dated 25 April 2017, Clause 13 - The Ombudsman has jurisdiction to consider complaints relating to partial or total repudiation of claims by an insurer. In this case, the insurer offered only Rs.5,00,000/- against the claim, which amounted to partial repudiation, thus the Ombudsman had jurisdiction. (Paras 5-10, 16) B) Insurance Law - Validity of Insurance Policy - Proposal Form - The insurer cannot challenge the validity of the policy after accepting premiums and issuing the policy, especially when the proposal form was unsigned and the point was not raised before the Ombudsman. (Paras 7-8, 15) C) Insurance Law - Reasonable and Customary Charges - Clause 3.41 - The Ombudsman's award of Rs.27,13,582/- was within the policy terms and based on evidence of actual payment of Rs.21,87,500/- as surgeon's fees. The insurer's comparison with other patients was not sufficient to reduce the claim. (Paras 11, 17) D) Insurance Law - Binding Nature of Ombudsman Award - IRDA Notification dated 25 April 2017 - The award is binding on the insurer and must be complied with within 30 days. The insurer's failure to comply led to the insured filing a writ petition for enforcement. (Para 19)
Issue of Consideration
Whether the Insurance Ombudsman had jurisdiction to entertain the complaint and whether the award directing payment of Rs.27,13,582/- was valid.
Final Decision
Writ Petition No.706 of 2024 filed by Oriental Insurance Co. Ltd. is dismissed. Writ Petition No.2903 of 2021 filed by Bharat Hirji Dedhia is allowed. The Insurance Company is directed to comply with the Ombudsman's award dated 03 May 2021 within four weeks from the date of the order.
Law Points
- Jurisdiction of Insurance Ombudsman
- Partial repudiation of claim
- Reasonable and customary charges
- Binding nature of Ombudsman award
- Estoppel against insurer after accepting premium
