The Bombay High Court adjudicated on two connected writ petitions involving an insurance dispute between Bharat Hirji Dedhia and Oriental Insurance Co. Ltd. The primary issue was the enforcement and challenge of an award by the Insurance Ombudsman dated 03 May 2021. The Court upheld the Ombudsman’s award, directing the insurance company to pay the insured amount with interest and imposed exemplary costs for delay, holding the company’s conduct grossly negligent.

1. Parties and Context (Paras 1-4)

• Petitioner: Bharat Hirji Dedhia, a senior citizen.
• Respondents: Oriental Insurance Co. Ltd. and Union of India.
• The dispute concerns the payment of Rs. 27,13,582/- under a health insurance policy issued by Oriental Insurance.

2. Challenging the Ombudsman’s Award (Paras 5-13)

• Oriental Insurance challenged the Ombudsman’s award, claiming it exceeded jurisdiction and that the policy was void due to non-disclosure of pre-existing medical conditions.
• The insurer also argued that the charges paid by the petitioner were unreasonable and exceeded policy limits.

3. Defense by the Petitioner (Paras 14-21)

• The petitioner highlighted that the insurer failed to dispute the Ombudsman’s jurisdiction earlier.
• It was argued that the insurer accepted premiums, issued policies, and had no valid grounds to repudiate the claim.

4. Conduct of the Insurance Company (Paras 22-38)

• The insurer delayed compliance with the award, suppressed material documents, and delayed clearing office objections.
• The Court criticized the insurer for causing undue harassment to a senior citizen.

5. Merits of the Case (Paras 39-50)

• The Court rejected the insurer’s claim that the policy was void, emphasizing that it collected premiums and issued policies.
• Arguments on "reasonable and customary charges" were found unsubstantiated.
• The Ombudsman’s award was deemed valid and within its jurisdiction.

6. Accountability and Directions (Paras 51-64)

• The Court imposed exemplary costs of Rs. 1,00,000/- and directed the insurer to pay interest at 7% per annum from 01 July 2021.
• Accountability was fixed on responsible officials, with directions to recover costs from their salaries and include adverse entries in their service records.

Acts and Sections Discussed

1. Insurance Regulatory and Development Authority Act, 1999:

   • IRDA’s Notification dated 25 April 2017 (Clause 13) detailing Ombudsman’s jurisdiction.
   • Clauses 17(6) and 17(8) mandating compliance with Ombudsman awards within 30 days.

2. Constitution of India:

   • Article 226: Writ jurisdiction of the High Court.

3. Insurance Act, 1938:

   • Regulatory framework for insurance companies.

4. Consumer Protection Law:

   • Referenced indirectly concerning the accountability of public-sector entities for harassment.

Ratio Decidendi:

• Jurisdiction of the Ombudsman: The Court ruled that the Insurance Ombudsman has broad jurisdiction under Clause 13 of the IRDA notification, including disputes on partial claim repudiations.
• Duty of Compliance: Non-compliance with the Ombudsman’s binding award breaches IRDA regulations, requiring accountability.
• Accountability of Officials: Public officials managing public funds are personally liable for unreasonable delays and harassment.

Subjects:

Insurance Law – Claim Settlement, Ombudsman Jurisdiction, Accountability of Public Sector Officials.

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