HC: Insurance Cos’ public service can be put on trial

Justice S Pushpa Sathyanarayana before whom a plea moved by a woman who was denied the benefit of an insurance policy opted by her deceased husband with the HDFC ERGO General Insurance Company Limited came up, said, “If any private body has a public duty imposed on it, the Court has jurisdiction to entertain the writ petition.”

The woman had submitted that her husband had passed away due to a heart attack while they were in Abu Dhabi. She filed for insurance based on a medical certificate issued by the Abu Dhabi hospital that he had passed away due to “acute coronary artery syndrome”. The HDFC, however, denied the claim stating that the policy covered only “myocardial infarction.”

A challenge by the woman to the HDFC’s repudiation of the claim was dismissed by an Insurance Ombudsman in May 2016. Aggrieved by this, she had moved the High Court.

HDFC had argued that it was not a “State” under Article 12 of the Constitution and that only contractual obligations existed between the insurance company and the claimant. Therefore, it was not amenable to the writ jurisdiction of the High Court under Article 226.

However, Justice Pushpa Sathyanarayana, on disagreeing with HDFCs contention said, “As happened in this case, lack of effective control has made the private bodies acquire more power like public authorities. The public monopoly power is replaced by private monopoly power. Hence, it becomes necessary that the private bodies are made accountable to judiciary within the judicial review.”

Regards the claim, the Court held that HDFC was liable to pay up on the insurance claim. Observing that the heart attack suffered by the petitioner’s husband by no stretch of imagination could be stated as not a major medical illness, Justice Pushpa Sathyanarayana, said, “The repudiation of the same would result in losing public faith in the private insurance companies.”

Also, recording the submission of a medical expert that acute coronary artery syndrome includes myocardial infarction, the judge opined that there is a need to bring about more transparency and accuracy of the facts before an insurance contract comes into force.

“There is no equality between the two as insurer is the richest corporation and the individual is an ordinary individual. In fact, 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 a 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,” Justice Pushpa Sathyanarayana said while noting that the case on hand is a classic example of the same.