Bombay High Court
Aditya Birla Sun Life Insurance ... vs The Insurance Ombudsman Goa, ... on 18 August, 2022
Bench: G. S. Kulkarni
Digitally
signed by
PRASHANT
PRASHANT VILAS RANE
VILAS Date:
RANE 2022.08.18
20:25:10
+0530
sat 901. wp 7804-2021
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 7804 OF 2021
Aditya Birla Sun Life Insurance Co.Ltd. ...Petitioner
vs.
1. The Insurance Ombudsman
Goa,Mumbai Metropolitan Region
excluding Navi Mumbai & Thane, Mumbai
2. Fatema F. Chhatriwala ...Respondents
----
Mr. Rushabh Vidyarthi with Ishita Bhole i/b. Asim Vidyarthi for Petitioner.
Mr. Kunal Mehta with Gautam Sahni i/b. Vesta Legal for Respondent No.2.
---
CORAM : G. S. KULKARNI, J.
DATE : 18 AUGUST 2022
JUDGMENT :
1. Rule made returnable forthwith. Respondent waives service. By
consent of parties, heard finally.
2. This petition under Article 227 of the Constitution of India challenges
an award dated 31 December 2020 passed by the Insurance Ombudsman,
whereby the claim as made by Respondent No.2, who is the wife of the
deceased insured has been allowed in terms of the following order :
"Under the facts and circumstances of the case, Aditya Birla Sun Life
Insurance Company Ltd is directed to settle death claim for Rs. 30 lacs,
if agreed upon by the complainant, as per terms and condition of the
policy, in full and final settlement of the complaint."
1 / 51
sat 901. wp 7804-2021
3. The petition raises the following questions for consideration:-
(i) Although Rule 17(6) read with Rule 17(8) of the Insurance
Ombudsman Rules 2017, makes an award of the Insurance
Ombudsman binding on the Insurance Company, whether a remedy
of assailing such award in a Writ Petition under Article 227 of the
Constitution is available to the insurance company or whether such
writ petition would not be maintainable ?
(ii) Whether non disclosure of any information on existing
ailments by an insured in the proposal form submitted to avail of a
life insurance policy, would disentitle the claimant under the policy,
to the benefits under such insurance policy ?
4. The factual antecedents are required to be noted:
(i) On 29 December 2017 Dr. Fakhruddin F. Chhatriwala, late husband of
Respondent No.2, (for short "the insured") applied to the Petitioner for a
Life Insurance Policy, known as 'ABSLI Life Guaranteed Milestone Insurance
Policy" through the Petitioner's Agent, HDFC Bank. The proposal, as made
to the Petitioner, was by the online method, by submitting a proposal form,
bearing No.EA00136215. Such proposal form provided for the insured's
consent qua the information as contained in the said proposal. A copy of
the proposal form along with a premium paid certificate is annexed to the
petition (Exhibit-B).
2 / 51
sat 901. wp 7804-2021
(ii) It is the Petitioner's case is that the proposal form mandated the
insured (late husband of Respondent No.2) to disclose particulars about his
medical history and more particularly, question nos.14 II, III(i)(ii), IV (a),
(h)(i), which were responded in the negative by the said proposer. The
questions are required to be noted, which read thus:
Question Response
14 Medical History
II) In the past five years, have you ever No
undergone any surgical operation at a
hospital or clinic or undergone any
investigations with other than normal or
negative results.
III) i. Are you on diet or any other No
medicine of any kind as prescribed by a
doctor?
ii. Are you currently undergoing or
intend to undergo any treatment? No
iii. Have you been advised for any No
surgical operation, procedure or hospital
admission? (including X-rays, ECG, blood
tests, biopsies, etc.)
IV) Have you ever sought advice or
suffered from any of the following?
(a) Chest pain, low or high blood
No
pressure, high cholesterol, heart attack,
heart murmur or other heart disorders? If
Yes, submit appropriate questionnaire. No
(c) Diabetes / elevated blood sugar or
sugar in the urine? If Yes, submit diabetes
questionnaire.
(h) Dizziness/fainting spells, epilepsy, No
paralysis, stroke, mental/emotional
disorder or any other neurological
disorder? If Yes, submit appropriate
questionnaire.
(i) kidney, urinary, bladder, reproductive
3 / 51
sat 901. wp 7804-2021
organ or prostate disorders? No
(emphasis supplied)
(iii) On 31 December 2017 the Petitioner, having received a 'duly filled
and signed' application/ proposal from the insured as also and the premium
amount and accepting the representations as made by the insured, issued
to the insured the life insurance policy in question bearing No.007453382.
The said insurance policy was delivered to the insured on 19 January 2018.
In the event of a claim the sum assured under the said policy was of an
amount Rs.75 lakhs, on the gross annual premium of Rs.5 lakhs being paid
for a premium term of six years.
(iv) It is the Petitioner's case that the said life insurance policy had unique
features whereunder the claimant could opt for death benefit either in
lumpsum at a discounted rate or obtain the sum in ten equal installments.
(v) On 10 October 2019, the insured expired while undergoing treatment
at the Saifee Hospital in Mumbai. The Medical Attendant's Certificate under
the signature of Dr. Siddharth Shah of Saifee Hospital dated 4 November
2019 recorded the cause of death to be "septicemia with multiple organ
failure k/c/o (known case of) Diabetes Mellitus/Hypertension (DM/HTN)".
(vi) On 7 November 2019, Respondent No.2, being the nominee of the
insured under the said insurance policy, intimated to the Petitioner about
4 / 51
sat 901. wp 7804-2021
the death of her husband. She also lodged a claim in the prescribed form,
titled as "Claimant's Statement Form (Death Claim)". In one of the
columns, in the form under the heading "Past Medical History", Respondent
No.2 as a claimant was required to set out information as to whether the
insured was ill prior to his death and the nature and the duration of illness
with date of diagnosis and names of doctors consulted in the last three
years. Such column was answered in the 'Nil' by Respondent No.2.
(vii) On receiving the "claim form" from Respondent No.2, the Petitioner
investigated such claim. On a careful evaluation of the documents obtained
during investigation, it was revealed to the petitioner that the deceased
insured had concealed material facts and/or had provided incorrect
information in respect to his past medical history. The petitioner's
investigation revealed that the life assured was under treatment for
schizophrenia and hypertension prior to the issuance of the policy, however,
such material fact was not disclosed by the deceased/insured while
obtaining the insurance policy. The Petitioner refers to the following details
as obtained form the Saifee Hospital records:-
Sr. No. Documents Description
1 Discharge Summary- In patient No. 5635461
Saifee Hospital Name- Dr. Fakhruddin F. Chhatriwala
Date of Admission-14.08.2015 Date of Birth - 17.6.1967
Date of Discharge- Mobile 9819008063
5 / 51
sat 901. wp 7804-2021
15.08.2015 Clinical Summary-
Patient admitted with A/H/O fall on
left elbow due to RTA K/C/O (Known
case of) HTN/Psychiatric illness on
medication.
2 Discharge Summary- Name- Dr. Fakhruddin F. Chhatriwala
Saifee Hospital In patient No. 579991
Date of Admission- 29.08.2016 Name- Dr. Fakhruddin F. Chhatriwala
Date of Discharge- 31.08.2016 Date of Birth - 17.6.1967
Mobile 9819008063
Clinical Summary -
Patient came in with c/o pain and
abnormal lightening sensation in left
elbow since 2-3 months K/C/O
(Known case of) Psychiatric illness on
treatment
3 Consultant Certificate dated Name- Mr. Fakhruddin F. Chhatriwala
09.01.2020- Dr. Hozefa A.
For treatment Schizophrenia since
Bhinderwala
2013.
4 Consultation Documents from Dr. Name- Mr. Fakhruddin Chhatriwala
Kedar Toraskar
Chief Complaint - C/O Polymeia with
Dated- 11.03.2019 Burning micturation
Past History k/c/o Schizophrenia 3
years under treatment of Dr. Hozefa
Bhindewala
Impression - Essential HT
(Hypertension)
5 Consultation Documents from Dr. Name- Mr. Fakhruddin Chhatriwala
Kedar Toraskar- Wockhardt
Primary Diagnosis - Type 2 DM
Hospitals
Chief Complaints -Essential HT
Dated- 05.10.2019
(Hypertension), Schizophrenia
6 Death Summary- Saifee Hospital Name- Mr. Fakhruddin F. Chhatriwala
Date of Admission- 06.10.2019 In patient No. 5717249
Date of Discharge-10.10.2019 Date of Birth - 17.6.1967
Mobile 9819008063
Diagnosis - Accelerated HTN Under
Evaluation
6 / 51
sat 901. wp 7804-2021
K/C/O - DM/HTN
Clinical Summary -52/M/K/C/O DM/
HTN/Psychiatric disorder on treatment
(viii) The Petitioner, hence, has contended that all the documents as
obtained by the Petitioner in the investigation, clearly established that the
insured was undergoing treatment for schizophrenia and hypertension
much prior to the proposal for insurance was made by the insured to the
Petitioner and by concealing such relevant information in the proposal
form, the insurance policy was obtained by the insured. The Petitioner
states that pertinently the insured himself was a doctor and was aware of
the nature of his illness and the treatment being given by him, he
nonetheless chose not to disclose such material information to the
Petitioner. The Petitioner has stated that the ailment as suffered by the
insured was significant and the "medical description" of the ailment was
thus :
". Schizophrenia is a psychiatric disorder characterized by
continuous or relapsing episodes of psychosis.
. Hypertension (HTN or HT), also known as high blood pressure
(HBP), is a long-term medical condition in which the blood pressure
in the arteries is persistently elevated. Schizophrenia is a lifelong
illness and requires a combination of treatments, including
medication and psychological counselling. It also leads to
hypertension, which further resulting in depression, paranoia, and
psychotic features."
(ix) It is the Petitioner's case that it was incumbent for the insured to
7 / 51
sat 901. wp 7804-2021
disclose the true and material facts in the application/proposal form which
according to the petitioner were concealed by the insured. It is contended
that if such ailments and the facts in relation thereto were to be disclosed
by the insured in the proposal form the Petitioner would have rejected the
insured's proposal to avail such life insurance policy.
(x) The Petitioner has contended that in regard to such information and
medical history of the insured, also an opinion of an external expert was
sought by the Petitioner, by appointing Dr.C.H. Asrani, who furnished an
opinion to the Petitioner dated 14 February 2020, stating that the insured
had knowledge of schizophrenia and hypertension, that he was under the
treatment for such diseases much prior to the making of a proposal to avail
such insurance policy. The opinion further recorded that as per the hospital
discharge summary of August 2015, the insured was a known case of both
such diseases, which implied that such ailments existed prior to the insured
applying for the insurance policy in question. It was recorded that the
documents revealed that the insured was receiving treatment for
schizophrenia since the year 2013. Such expert also recorded that there has
been an apparent non-disclosure of these ailments by the insured, which
was a significant non-disclosure and such revelation at the proposal stage
would have led to an altogether different conclusion for the Petitioner as to
whether the proposal be accepted. He also recorded that the patients of
8 / 51
sat 901. wp 7804-2021
schizophrenia have high risk of severe infections including sepsis and that
the insured had in fact expired due to such disease. He also recorded that
the non-disclosure of such ailments as suffered by the insured was
significant.
(xi) The Petitioner considering the investigation report, and the other
relevant materials so procured, and in accordance with the provisions of
policy and regulations, arrived at a decision to repudiate the insurance
claim as made by Respondent No.2. Such decision was communicated to
Respondent No.2 by the Petitioner by its letter dated 27 February 2020.
Respondent No.2 however requested for reconsideration of her claim. She
accordingly moved the Grievance Redressal Committee (for short "the
GRC"). The GRC, upon evaluation of the material and the evidence,
however, came to a conclusion to stand by the petitioner's decision to
repudiate the claim, thereby accepting the Petitioner's case that there was a
significant non-disclosure of the ailments by the insured and hence, the
decision as taken by the Petitioner to repudiate the claim was an
appropriate decision. The GRC's decision came to be communicated to
Respondent No.2 by its letter dated 22 May 2020, as also, by its email
dated 3 June 2020.
(xii) On the above backdrop, Respondent No.2, being aggrieved by the
9 / 51
sat 901. wp 7804-2021
decision of the Petitioner to repudiate the insurance claim, filed a complaint
before Respondent No.1 Ombudsman, constituted under the Insurance
Ombudsman Rules, 2017. The case of Respondent No.2 before the
Ombudsman was to the effect that the insured was never suffering from
schizophrenia and hypertension at the time of availing the insurance policy,
except for mild depression. Respondent No.2 contended that the Petitioner
did not carry out premedical test/examination and that the death of the
deceased was due to 'septicemia and multiple organ failure' which had no
correlation with the illnesses namely schizophrenia and hypertension.
Respondent No.2 also contended that HDFC Bank, being the agent of the
Petitioner, forced and induced the insured to purchase the policy from the
Petitioner.
(xiii) The Petitioner filed its reply to the complaint made by Respondent
no.2 before the Ombudsman, thereby denying Respondent No.2's case. The
Petitioner asserted that the insured was aware about his ailments, namely,
schizophrenia and hypertension, much before he applied for the insurance
policy, hence he ought to have disclosed such ailments in the specific
columns as provided therefor in the proposal form. The Petitioner asserted
that such non-disclosure was material to the issuance of the policy in
question. It was also contended that the claim as made by Respondent No.2
was not maintainable as Respondent No.2 had made a claim of Rs.75 lakhs
10 / 51
sat 901. wp 7804-2021
which was beyond the pecuniary jurisdiction of the Ombudsman as
provided under Rule 17(3) of the Insurance Ombudsman Rules, 2017
hence, even on such count respondent No.2's complaint was liable to be
rejected.
(xiv) Responding to the objection of the Petitioner, Respondent No.2
submitted a letter dated 11 September 2020 before the Insurance
Ombudsman purporting to reduce her claim to rupees thirty lakhs. The said
letter reads thus:-
" 11.9.2020
To
The Insurance Ombudsman,
Mumbai.
Dear Sir,
I will be satisfied with the amount of Rs.30 lacs which
settled with the Ombudsman even though the claim is 75 lakhs.
Request for an early date for the settlement.
Thanking you,
Fatema F. Chhatriwala"
5. The Insurance Ombudsman was, however, not inclined to accept the
Petitioner's contention on any of the counts and by the impugned order has
awarded respondent No.2's claim as noted above.
Submissions
6. At the outset, learned Counsel for the Petitioner, in assailing the
impugned award, would submit that the impugned award is per-se without
11 / 51
sat 901. wp 7804-2021
jurisdiction inasmuch the actual claim as made by Respondent No.2 before
the Insurance Ombudsman was for Rs.75 lakhs, which was clearly beyond
the pecuniary jurisdiction of the Ombudsman, as the proviso below Sub-
Rule (3) of Rule 17 ordains that the Ombudsman inter alia shall not award
compensation exceeding Rs.30 lakhs. It is submitted that respondent No.2's
letter dated 11 September 2020 submitting that she would be satisfied if
her claim is settled at Rs.30 lakhs in no manner was any amendment of her
original claim of Rs.75 lakhs.
7. Learned Counsel for the petitioner would next submit that the
insured had clearly failed to disclose the pre-existing ailments which were
required to be disclosed by him in the proposal form, as submitted online.
It is the Petitioner's submission that once there was a non-disclosure and
more so, which according to him in the present case was not bonafide, it
certainly amounted to concealing of material facts to obtain the insurance
policy. It is hence submitted that the decision of the Petitioner to repudiate
the claim could not have been disturbed by the Ombudsman. Learned
Counsel for the Petitioner relying on the decision of the Supreme Court in
Reliance Life Insurance Company Ltd. vs. Rekhaben Nareshbhai Rathod 1,
would submit that any non-disclosure by the deceased insured to the
insurer was held by the Supreme Court to result in the insurance contract
1 (2019) 6 SCC 175
12 / 51
sat 901. wp 7804-2021
being vitiated on the grounds enumerated under Section 45 of the
Insurance Act, 1938 entitling the insurer to repudiate the contract of
insurance. It is submitted that the Supreme Court has clearly held that the
disclosure in order to be material, need not be connected directly to the
cause of death. On such proposition, reliance is also placed on another
decision of the Supreme Court in Branch Manager, Bajaj Allianz Life
Insurance Company Ltd. vs. Dalbir Kaur 2. It is hence submitted that the
non-disclosure of hypertension and schizophrenia was a material non-
disclosure on the part of the deceased insured. It is submitted that also
there was never a denial on behalf of Respondent No.2 that the insured
never suffered such ailments. It is submitted that in fact the record clearly
depicted the position that the insured was consistently prescribed
medicines for hypertension even before the year 2015, i.e. prior to the
insured applying for the life insurance policy in question, and accordingly,
on six issues there was a material suppression, as set out in the Petitioner's
letter dated 27 February 2020. It is hence submitted that Respondent No.2
was not entitled for the claim as made under the insurance policy in
question. The Petitioner would hence pray that the impugned order needs
to be quashed and set aside in these circumstances and the writ petition be
allowed.
2 2020 SCC OnLine SC 848
13 / 51
sat 901. wp 7804-2021
8. On the other hand, learned Counsel for Respondent No.2 at the
outset has raised an objection to the maintainability of this petition relying
on the decision of a learned Single Judge of the Calcutta High Court in Life
Insurance Corporation of India vs. The Insurance Ombudsman 3 to submit
that it is not open to the petitioner-insurance company to file a writ petition
against an award passed by the Insurance Ombudsman, considering the
provisions of the Insurance Ombudsman Rules, 2017. It is submitted that
Rule 17(6) read with 17(8) of the 2017 Rules provides for a statutory
mandate on the insurer to comply with the award passed by the
Ombudsman providing that the award of the Insurance Ombudsman is
binding on the insured. The contention is that similar provisions existed in
the erstwhile "Redressal of Public Grievances Rules, 1998" which had fell
for consideration before the learned Single Judge of Calcutta High Court in
the case of Life Insurance Corporation of India vs. The Insurance
Ombudsman (supra) in which the Court held that a writ petition by an
Insurance company would not lie against the award as made by the
Ombudsman.
9. Learned counsel for Respondent No.2 apart from the above objection,
would submit, there is no jurisdictional error on the part of the Insurance
Ombudsman in passing the impugned award, as being urged by the
3 2017 SCC Online Calcutta 1238
14 / 51
sat 901. wp 7804-2021
Petitioner/insurance company. Insofar as the Petitioner's contention that the
award as made by the Insurance Ombudsman was beyond the pecuniary
jurisdiction of the Insurance Ombudsman, considering the proviso to Rule
17(3) of the 2017 Rules, providing that the Insurance Ombudsman cannot
award compensation in excess of Rs.30 lakhs, it is submitted that although
Respondent No.2 had made a claim of Rs.75 lakhs it was open for
Respondent No.2 to forego a portion of her claim to bring the proceeding
within the jurisdiction of the Ombudsman and hence, there was no
jurisdictional error on the part of the Ombudsman in allowing the claim as
made by Respondent No.2.
10. On merits, it is submitted that it is not correct for the Petitioner to
contend that this is a case of non-disclosure of the ailments by the insured,
for the reason that the insured was diagnosed with hypertension in and
around 2019 which was subsequent to the issuance of the insurance policy
which according to Respondent No.2 was evident from the medical record,
namely, the prescription as issued by Dr. Toraskar's clinic. It is submitted
that Dr. K. Toraskar, being the Consultant Chest Physician and Intensivist,
referred to the past history of hypertension of six months. It is next
submitted that even the discharge summary papers issued by Saifee
Hospital dated 31 August 2015 pertained to the date of admission being 29
August 2016 and date of discharge being 31 August 2016, which also
15 / 51
sat 901. wp 7804-2021
recorded no history of hypertension. It is next contended that the said
discharge summary file prescribed 'Tablet Amlopress L' for hypertension is
not correct as the said tablet is also prescribed to reduce blood pressure of a
patient at any given time and in the case of the insured, it was prescribed to
him as his blood pressure had spiked during his surgery on 31 August
2016. It is, thus, Respondent No.2's submission that these two documents
negate the contention that the insured was suffering from hypertension as
on 31 August 2016. The decision of the Ombudsman, therefore, cannot be
held to be perverse nor is there any jurisdictional error. On the petitioner's
contention on suppression of ailments is concerned, it is submitted that
schizophrenia being psychological disorder has no correlation with the
actual cause of death of the insured, which was caused due to multiple
organ failure. It is submitted that the suppression, as alleged, in any event,
cannot warrant repudiation of the policy. In support of such contention,
reliance is placed on the decision of Supreme Court in Sulbha Prakash
Motegaonkar vs. Life Insurance Corporation of India 4 and on the decision of
Supreme Court in Branch Manager, Bajaj Allianz Life Insurance Company
Ltd. vs. Dalbir Kaur (supra) to submit that it is a clear position in law that it
is necessary to consider as to whether non-disclosure of the ailments had a
correlation with the cause of death and it is not any and every non-
disclosure which would entitle the insurer to repudiate the policy.
4 (2019) 6 SCC 175
16 / 51
sat 901. wp 7804-2021
11. Learned counsel for respondent No.2 would next submit that
the opinion of Dr. C.H. Asrani, the expert appointed by the petitioner would
demonstrate that even the Petitioner understood that the non-disclosure
had to be significant, hence, the approach of the Petitioner to canvass any
suppression of information to obtain the insurance policy, ought not to be
accepted by this Court. It is submitted that the insurance company having
taken a cumulative premium of Rs.10,33,750 from the insured, the
Petitioner was liable to honour the claim as made by Respondent No.2 in
the absence of any material which would suggest that septicemia and
multiple organ failure can have any correlation with past history of
schizophrenia. It is, accordingly, submitted that the petition be dismissed.
Analysis and conclusion :
12. I have heard learned counsel for the parties and with their
assistance I have also perused the record.
13. On behalf of Respondent No.2, as an objection has been raised to the
maintainability of the present petition, the same would be first required to
be considered. The objection as raised on behalf of Respondent No.2 is to
the effect that in view of Rules 17(6) read with Rule 17(18) of the
Insurance Ombudsman Rule 2017, as the award as made by the Insurance
17 / 51
sat 901. wp 7804-2021
Ombudsman is binding on the Insurance Company, the present petition
filed under Article 227 of the Constitution, would not be maintainable. In
supporting such contention, learned Counsel for Respondent No.2 has
placed reliance on the decision of the learned Single Judge of the Calcutta
High Court in Life Insurance Corporation of India vs. The Insurance
Ombudsman (supra) to contend that it has been held that the Petitioner
being the Insurance company cannot be aggrieved by the award passed by
the Insurance Ombudsman, inasmuch as there is a statutory mandate on
the insurer to comply with the award passed by the Ombudsman as
provided under the said rules, which is binding on the insurer. It is
submitted that although the said decision was rendered in the context of
the Redressal of Public Grievances Rules, 1998, it would squarely apply to
the Insurance Ombudsman Rules, 2017 under which the impugned award
has been made by the Ombudsman, the provisions of the rules being pari
materia.
14. To appreciate such objection urged on behalf of Respondent
No.2 it would be appropriate to note the statutory scheme falling under the
Ombudsman Rule 2017. Some of the relevant rules need to be noted which
read thus:-
"2. The objects of these Rules is to resolve all complaints of all personal lines
of insurance, group insurance policies, policies issued to sole proprietorship
and micro enterprises on the part of insurance companies and their agents
18 / 51
sat 901. wp 7804-2021
and intermediaries in a cost effective and impartial manner.
7. Insurance Ombudsman. --
(1) There shall be established such number of Insurance Ombudsman for
such territorial jurisdiction as the Executive Council of Insurers may
specify, for discharging the duties and functions prescribed under these
rules.
(2) An Ombudsman shall be selected from amongst persons having
experience of the insurance industry, civil service, administrative service or
judicial service.
(3) An Ombudsman shall be selected by a Selection Committee
comprising of--
(a) Chairperson of the IRDAI, who shall be the Chairman of the
Selection Committee;
(b) one representative each of the Life Insurance Council and the
General Insurance Council from the Executive Council of Insurers -
members;
(c) A representative of the Government of India not below the rank
of a Joint Secretary or equivalent, in the Ministry of Finance, from
the Department of Financial Services--member.
(4) The Executive Council of Insurers shall prepare a panel through an
open process by inviting applications from amongst the eligible
candidates and the selection process shall be in accordance with the
selection criteria finalised by the Executive Council of Insurers with the
approval of the Central Government in the Ministry of Finance.
(5) An Ombudsman shall be appointed after satisfactory vigilance
clearance from the immediate previous employer and medical fitness
report from an authorised doctor.
11. Territorial jurisdiction of Insurance Ombudsman. --
(1) The office of the Insurance Ombudsman shall be located at such
places and shall have such territorial jurisdiction as may be specified by
the Executive Council of Insurers from time to time.
(2) The Executive Council of Insurers shall specify the territorial
jurisdiction of each Ombudsman.
(3) The Ombudsman may hold sitting at various places within his area of
jurisdiction in order to expedite disposal of complaints.
13. Duties and functions of Insurance Ombudsman. --
19 / 51
sat 901. wp 7804-2021
(1) The Ombudsman shall receive and consider complaints or disputes
relating to--
(a) delay in settlement of claims, beyond the time specified in the
regulations, framed under the Insurance Regulatory and
Development Authority of India Act, 1999;
(b) any partial or total repudiation of claims by the life insurer,
General insurer or the health insurer;
(c) disputes over premium paid or payable in terms of insurance
policy;
(d) misrepresentation of policy terms and conditions at any time in
the policy document or policy contract;
(e) legal construction of insurance policies in so far as the dispute
relates to claim;
(f) policy servicing related grievances against insurers and their
agents and intermediaries;
(g) issuance of life insurance policy, general insurance policy
including health insurance policy which is not in conformity with the
proposal form submitted by the proposer;
(h) non-issuance of insurance policy after receipt of premium in life
insurance and general insurance including health insurance; and
(i) any other matter resulting from the violation of provisions of the
Insurance Act, 1938 or the regulations, circulars, guidelines or
instructions issued by the IRDAI from time to time or the terms and
conditions of the policy contract, in so far as they relate to issues
mentioned at clauses (a) to (f).
(2) The Ombudsman shall act as counsellor and mediator relating to
matters specified in sub-rule (1) provided there is written consent of the
parties to the dispute.
(3) The Ombudsman shall be precluded from handling any matter if he
is an interested party or having conflict of interest.
(4) The Central Government or as the case may be, the IRDAI may, at
any time refer any complaint or dispute relating to insurance matters
specified in sub-rule (1), to the Insurance Ombudsman and such
complaint or dispute shall be entertained by the Insurance Ombudsman
and be dealt with as if it is a complaint made under rule 14.
14. Manner in which complaint to be made. --
(1) Any person who has a grievance against an insurer, may himself or
through his legal heirs, nominee or assignee, make a complaint in
writing to the Insurance Ombudsman within whose territorial
jurisdiction the branch or office of the insurer complained against or
the residential address or place of residence of the complainant is
located.
20 / 51
sat 901. wp 7804-2021
(2) The complaint shall be in writing, duly signed by the complainant
or through his legal heirs, nominee or assignee and shall state clearly
the name and address of the complainant, the name of the branch or
office of the insurer against whom the complaint is made, the facts
giving rise to the complaint, supported by documents, the nature and
extent of the loss caused to the complainant and the relief sought from
the Insurance Ombudsman.
(3) No complaint to the Insurance Ombudsman shall lie unless--
(a) the complainant makes a written representation to the insurer
named in the complaint and--
(i) either the insurer had rejected the complaint; or
(ii) the complainant had not received any reply within a period
of one month after the insurer received his representation; or
(iii) the complainant is not satisfied with the reply given to him
by the insurer;
(b) The complaint is made within one year--
(i) after the order of the insurer rejecting the representation is
received; or
(ii) after receipt of decision of the insurer which is not to the
satisfaction of the complainant;
(iii) after expiry of a period of one month from the date of
sending the written representation to the insurer if the insurer
named fails to furnish reply to the complainant .
(4) The Ombudsman shall be empowered to condone the delay in such
cases as he may consider necessary, after calling for objections of the
insurer against the proposed condonation and after recording reasons
for condoning the delay and in case the delay is condoned, the date of
condonation of delay shall be deemed to be the date of filing of the
complaint, for further proceedings under these rules.
(5) No complaint before the Insurance Ombudsman shall be
maintainable on the same subject matter on which proceedings are
pending before or disposed of by any court or consumer forum or
arbitrator.
15. Insurance Ombudsman to act fairly and equitably. --
(1) The Ombudsman may, if he deems fit, allow the complainant to
adopt a procedure other than under sub-rule (1) or sub-rule (2) of
rule 14 for making a complaint, after notifying the parties to the
dispute.
(2) The Ombudsman shall have the power to ask the parties
concerned for additional documents in support of their respective
contentions and wherever considered necessary, collect factual
information relating to the dispute available with the insurer and
21 / 51
sat 901. wp 7804-2021
may make available such information to the parties concerned.
(3) The Ombudsman may obtain the opinion of professional experts,
if the disposal of a case warrants it.
(4) The Ombudsman shall dispose of a complaint after giving the
parties to the dispute a reasonable opportunity of being heard.
16. Recommendations made by the Insurance Ombudsman. --
(1) Where a complaint is settled through mediation, the
Ombudsman shall make a recommendation which it thinks fair in
the circumstances of the case, within one month of the date of
receipt of mutual written consent for such mediation and the copies
of the recommendation shall be sent to the complainant and the
insurer concerned.
(2) If the recommendation of the Ombudsman is acceptable to the
complainant, he shall send a communication in writing within fifteen
days of receipt of the recommendation, stating clearly that he accepts
the settlement as full and final.
(3) The Ombudsman shall send to the insurer, a copy of its
recommendation, along with the acceptance letter received from the
complainant and the insurer shall, thereupon, comply with the terms
of the recommendation immediately but not later than fifteen days
of the receipt of such recommendation, and inform the Ombudsman
of its compliance.
17. Award. --
(1) Where the complaint is not settled by way of mediation under
rule 16, the Ombudsman shall pass an award, based on the
pleadings and evidence brought on record.
(2) The award shall be in writing and shall state the reasons upon
which the award is based.
(3) Where the award is in favour of the complainant, it shall state
the amount of compensation granted to the complainant after
deducting the amount already paid, if any, from the award :
Provided that the Ombudsman shall,--(i) not award any
compensation in excess of the loss suffered by the complainant as a
direct consequence of the cause of action; or (ii) not award
compensation exceeding rupees thirty lakhs (including relevant
expenses, if any).
22 / 51
sat 901. wp 7804-2021
(4) The Ombudsman shall finalise its findings and pass an award
within a period of three months of the receipt of all requirements
from the complainant.
(5) A copy of the award shall be sent to the complainant and the
insurer named in the complaint.
(6) The insurer shall comply with the award within thirty days of
the receipt of the award and intimate compliance of the same to the
Ombudsman.
(7) The complainant shall be entitled to such interest at a rate per
annum as specified in the regulations, framed under the Insurance
Regulatory and Development Authority of India Act, 1999, from the
date the claim ought to have been settled under the regulations, till
the date of payment of the amount awarded by the Ombudsman.
(8) The award of Insurance Ombudsman shall be binding on the
insurers."
15. As to what is revealed from the reading of the above rules, needs to
be discussed. It is seen from Rule 2 that the object of the Rules is to resolve
all complaints of all personal lines of insurance, group insurance policies,
policies issued to a sole proprietorship and micro enterprises on the part of
the insurance companies and their agents and intermediaries in a cost
effective and impartial manner. It provides for appointment of an insurance
Ombudsman under Rule 7 for discharging duties and functions prescribed
under the said Rules. Rule 11 provides for territorial jurisdiction of the
Insurance Ombudsman. Rule 13 provides for duties and functions of
Insurance Ombudsman, namely, to receive and complaints or disputes on
various counts as specified in clause (a) to (i). One of the issues on which a
dispute can be entertained by the Ombudsman is in respect of a partial or
23 / 51
sat 901. wp 7804-2021
total repudiation of claim by the life insurer, general insurer or health
insurer as sub-clause (b) of Rule 13 would provide. Rule 14 provides the
manner in which the complaint is to be made by any person who has a
grievance against the insurer, who may himself or through his legal heirs,
nominee or assignee, make a complaint in writing to the Insurance
Ombudsman within whose territorial jurisdiction the branch of office of the
insurer complained against or the residential address or place of residence
of the complainant is located. Sub-Rule (4) of Rule 14 provides for a power
to condone the delay recording reasons if the complaint is not filed within a
prescribed period of one year as provided in clause 3(b) of the said Rules.
Rule 15 is significant which provides that Insurance Ombudsman to act
fairly and equitably. Sub-rule (3) of Rule 15 provides for obtaining the
opinion of professional experts, if the disposal of the case so warrants. Sub-
rule (4) makes it obligatory on the Ombudsman to dispose of a complaint
after giving the parties to the dispute a reasonable opportunity of being
heard. Rule 16 provides for recommendations to be made by the Insurance
Ombudsman in regard to a settlement to be brought about between the
complainant and the insurer. It provides for the mechanism of settlement to
be arrived between the parties. Rule 17 provides for an award to be made
by the Insurance Ombudesman in the event when the complaint is not
settled by way of mediation. Under Rule 17, the Ombudsman is under
24 / 51
sat 901. wp 7804-2021
mandatory obligation to pass an award based on the pleadings and
evidence placed on record. It further provides that the award shall be in
writing and shall state the reasons upon which the award is based. Sub-rule
(3) of Rule 17 provides that where the award is in favour of the
complainant, it shall state the amount of compensation granted to the
complainant after deducting the amount already paid, if any, from the
award. Proviso below sub-rule (3) of Rule 17 ordains that the Ombudsman
shall not award any compensation in excess of the loss suffered by the
complainant as a direct consequence of the cause of action; or, not award
compensation exceeding rupees thirty lakhs (including relevant expenses, if
any). Sub-Rule (4) provides that the Ombudsman shall finalise its finding
and pass an award within a period of three months of the receipt of all
requirements from the complainant. Sub-rule (5) provides that a copy of
the award shall be sent to the complainant and the insurer named in the
complaint. Sub-rule (6) provides that the insurer shall comply with the
award within 30 days of the receipt of the award and intimate compliance
of the same to the Ombudsman. Further Sub-Rule (7) provides that the
complainant shall be entitled to such interest at a rate per annum as
specified in the regulations framed under the Insurance Regulatory and
Development Authority of India Act, 1999, from the date the claim ought to
have been settled under the regulations, till the date of payment of the
25 / 51
sat 901. wp 7804-2021
amount awarded by the Ombudsman. Sub-Rule (8) provides that the award
of the Ombudsman shall be binding on the insurer.
16. Thus, the statutory scheme of the Insurance Ombudsman Rules,
2017, clearly reflects that when the Ombudsman makes an award under
Rule 17 while exercising his duties and functions under Rule 13, the
Insurance Ombudsman is in fact adjudicating the dispute as made in the
complaint. In such context, Sub-rule (4) of Rule 15 is required to be noted
which clearly provides that the Ombudsman shall dispose of the complaint
after giving the parties to the dispute a reasonable opportunity of being
heard. Sub-rule (2) of Rule 17 provides that the award shall be in writing
and state the reasons upon which the award is based. Sub-rule (8) of Rule
17 provides that the award of the Insurance Ombudsman shall be binding
on the insurer. From a cumulative reading of the rules and its provisions, it
is thus clear that the adjudication being undertaken by the Insurance
Ombudsman has all trappings of an adjudication by a tribunal when the
Insurance Ombudsman adjudicates a complaint. In the course of such
adjudication, he is under an obligation to act judicially, he is required to
follow all the essential ingredients of what a tribunal would be required to
follow in adjudicating such disputes, namely of a hearing to be granted to
the parties before him and taking a decision by furnishing reasons on such
decision in pronouncing upon the rights or liabilities arising under the
26 / 51
sat 901. wp 7804-2021
insurance contract. Thus, necessarily the functions which are discharged by
the Ombudsman are akin to the function as discharged by a tribunal in
adjudicating the dispute.
17. It is well established that the word "tribunal" as used in Article 227
of the Constitution is required to be given a liberal interpretation to include
all statutory authorities who are vested with quasi judicial power even
though they may not have been labelled as tribunals. In this context, it
would be useful to refer to the decision of the Supreme Court in
Manmohan Singh Jaitla vs. Commissioner Union Territory, Chandigarh &
Ors.5. Paragraph 7 of the said decision needs to be noted which reads thus:-
"7. The High Court declined to grant any relief on the ground that an aided
school is not "other authority" under Article 12 of the Constitution and is
therefore not amenable to the writ jurisdiction of the High Court. The High
Court clearly overlooked the point that Deputy Commissioner and
Commissioner are statutory authorities operating under the 1969 Act. They
are quasi-judicial authorities and that was not disputed. Therefore, they will
be comprehended in the expression 'Tribunal' as used in Article 227 of the
Constitution which confers power of superintendence over all courts and
tribunals by the High Court throughout the territory in relation to which it
exercises jurisdiction. Obviously, therefore, the decision of the statutory
quasi-judicial authorities which can be appropriately described as tribunal
will be subject to judicial review namely a writ of certiorari by the High
Court under Article 227 of the Constitution. The decision questioned before
the High Court was of the Deputy Commissioner and the Commissioner
exercising powers under Section 3 of the 1969 Act. And these statutory
authorities are certainly amenable to the writ jurisdiction of the High
Court."
(emphasis supplied)
18. A reference can also be made to the decision of the Supreme
Court in Durga Hotel Complex vs. Reserve Bank of India 6 wherein the
5 AIR 1985 SC 364
6 (2007) 5 SCC 120
27 / 51
sat 901. wp 7804-2021
question before the Supreme Court was under the Banking Ombudsman
Scheme, 1995. In the context of the present controversy, the observations of
the Supreme Court in such decision are quite significant. The Supreme
Court, has observed that 'the Ombudsman' at the best, is an authority or
tribunal of limited jurisdiction constituted under the scheme. It is held that
conceptually, an Ombudsman is only a non-adversarial adjudicator of
disputes and hence, was required to act and confine himself to the rules
under which the Ombudsman was acting. In the context of the present
case, the observations of the Supreme Court that the Ombudsman is an
authority or Tribunal of a limited jurisdiction would also support my
conclusion that the Ombudsman being a statutory Tribunal, the present
petition filed under Article 227 of the Constitution would be maintainable.
19. A reference can be made to a decision of the Division Bench of
the Uttarakhand High Court in the case of M/s Amrit Versha Udyog Pvt. Ltd
vs Uttaranchal Power Corporation Ltd.7 which was a case arising under the
Electricity Act, 2003 in which one of the issues which fell for consideration
of the Court was in relation to an award made by the Electricity
Ombudsman. The question before the Division Bench was whether an order
passed by the Ombudsman or the decision of the Ombudsman under
Section 42(7) of the Electricity Act is one passed by the Tribunal.
7 2016 SCC OnLine Utt 2384
28 / 51
sat 901. wp 7804-2021
Answering the question in the affirmative, the Court examining the
functions of the Ombudsman which were akin to the scheme under the
rules in question in the present proceedings, it was observed that where an
authority is required to act judicially either by an express provision under a
statute under which it acts, the decisions of such an authority generally
amount to quasi judicial decisions. It was observed that such adjudication
had all "trappings" of the Tribunal. The Court observed that perusal of the
Regulations framed under the Electricity Act clearly indicated that the
Ombudsman was called upon to decide a lis raised by a consumer and the
fact that it was not open to the distribution licensee (or in the present case
"the insurer") to challenge the order of the consumer forum as the right to
make representation was exclusively conferred only on the consumer,
would not in the slightest manner distract from holding that the
Ombudsman is a Tribunal. It was held that the Ombudsman was hence
clearly a Tribunal. The relevant observations of the Court are required to be
noted, which read thus :
"26. Every court is a Tribunal. The vice versa is not however, correct. A
Tribunal discharges judicial power of the State. It does not have all the
trappings of a court. The nomenclature by which it is called may not be
decisive for the question as to whether it is a Tribunal or not.
Undoubtedly, it is dubbed as Ombudsman. The word "Ombudsman" has
various shades of meaning; but we are called upon to decide what it is
in the context of the functions it performs. Under Sub-Section 5 of
Section 42 of the Act, every distribution licensee is expected to
constitute a forum. The Act is a departure from the earlier Electricity
Act and transformatory changes were intended by the Parliament. The
primary concern of the Parliament was to see that production of
electricity is enhanced, in particular, by giving a greater role to private
29 / 51
sat 901. wp 7804-2021
players, providing for commission which would fix the tariff; taking
note of the fact that many States did not allow for the Electricity Boards
to enhance the tariff, an independent Commission was contemplated.
One of the roles assigned to the said Commission was appointment of
Ombudsman. The Ombudsman was to decide the representations made
by consumers only undoubtedly when they felt aggrieved by non-
redressal of their grievances, which they sought to ventilate before the
consumer forum, which was to be established by the distribution
licensee under Sub Section (5). Here, we are not called upon to decide
the question whether the consumer forum is a Tribunal. We say this for
the reason that it is contended by Mr. Piyush Garg that the consumer
forum is not a Tribunal. That is clearly besides the point. Here, we are
to decide the question whether the Ombudsman is a Tribunal.
27. It is equally true that a consumer, who is aggrieved by the
nonredressal of his grievances by the consumer forum, has a range of
choices before him; in that, he may choose to represent his grievances
before the Ombudsman under sub-section (6) of Section 42 or he may
go elsewhere in search of relief. The law protects the right of choice.
But we would think that it is not relevant that the Ombudsman is not
an exclusive forum created under the law to deal with the grievances of
the consumer arising from the disposal of his complaint by the
consumer forum. The mere fact that the consumer may approach other
forum seeking the relief will not deflect from the Ombudsman being a
Tribunal, if it otherwise possess the attributes of a Tribunal. Therefore,
we reject the argument that there is no exclusive power vested with the
Ombudsman.
32. A perusal of these provisions would leave us in no doubt that the
Ombudsman is called upon to decide a lis raised by a consumer. The
fact that it is not open to the distribution licensee to challenge the order
of the consumer forum, as right to make representation is exclusively
conferred only on the consumer, in our view, does not in the slightest
manner detract from our holding that the Ombudsman is a Tribunal.
The decision by which the consumer is aggrieved is rendered by the
consumer forum, which is appointed by the distribution licensee.
Apparently, the Legislature thought that, in such circumstances, it is
only the consumer who would have a ground to proceed against the
decision of the forum. What is most relevant is whether the judicial
power of the State is being exercised by the Ombudsman in the
circumstances in which it does not have all the trappings of a court and,
therefore, it is not a court, but becomes a Tribunal. As already noticed,
a procedure has been laid down by the Commission through statutory
Regulations which we have already adverted to. It encompasses the
duty to comply with the principles of natural justice by way of affording
an opportunity to the parties to represent and it endows power with the
Ombudsman to take evidence, be it oral or documentary. The principles
by which it is to be guided are specifically mentioned and which we
30 / 51
sat 901. wp 7804-2021
have adverted to. It is clearly quasi-judicial in nature. Also, we cannot
liken it to an executive body, which takes its decision based on
considerations of policy. Unlike a domestic inquiry report, which is
rendered by the person appointed by the disciplinary authority, which
can be accepted or rejected by the appointing authority, the Award by
the Ombudsman is binding on the parties. It terminates the lis as far as
the parties are concerned, subject to their right to question it in the
appropriate forum. They cannot ignore the decision, except upon peril
of being proceeded with under Section 142 read with Section 146.
.......
38. Therefore, we may notice that the Apex Court has observed that
even under the said Scheme, the Ombudsman, at best, is an authority
or tribunal of limited jurisdiction. We must notice that, far from
detracting from the reasoning, which we have employed or the finding
which we are arriving at, namely, that the Ombudsman under the Act is
a Tribunal, we find re-enforcement for our view from the observations
made by the Apex Court. Having regard to the scheme of the Act and
the Regulations, we are of the clear view that a Tribunal, be it a
tribunal of limited jurisdiction, remains a Tribunal, which is what is
relevant for the purpose of deciding this case."
(Emphasis supplied)
20. In my opinion, the above principles of law although in the
context of the Schemes of Ombudsman Regulations, 2004 under the
Electricity Act are squarely applicable to the statutory scheme of
Ombudsman under the Insurance Ombudsman Rules 2017 as in question,
in the present case.
21. In Columbia Sportswear Company Vs. Director of Income Tax,
Bangalore8 the question which had arisen before the Supreme Court was as
to whether an advance ruling pronounced by the Advance Ruling Authority
(for short "AAR") can be challenged by the applicant or by the
Commissioner or any income-tax authority subordinate to him under
8 (2012)11 SCC 224
31 / 51
sat 901. wp 7804-2021
Article 226/227 of the Constitution before the High Court or under Article
136 of the Constitution before the Supreme Court. In answering such
question, the Supreme Court examined whether the AAR, if not a Court,
was a tribunal within the meaning of expression as used in Article 136 and
227 of the Constitution and whether the AAR had a duty to act judicially
and was amenable to writs of Certiorari and Prohibition under Article 226
of the Constitution. Considering the meaning of the expression "tribunal" as
used in Article 136 and the expression "tribunals" in Article 227 of the
Constitution, referring to its decision in Harinagar Sugar Mills v. Shyam
Sunder9, the Court observed that the test for determining whether a body is
a tribunal or not is to find out whether it is vested with the judicial power
of the State by any law to pronounce upon rights or liabilities arising out of
some special law. It was observed that such test has been reiterated by the
Supreme Court in Jaswant Sugar Mills Ltd. v. Lakshmi Chand & Ors. 10. The
Supreme Court examining the provisions and the nature of the duties as
conferred on the AAR under the provisions of Sections 245N and 245S
observed that the later provision expressly made the advance ruling binding
on the applicant, in respect of the transaction and also on the
Commissioner and the income-tax authorities subordinate to him and
hence, the AAR was a body acting in judicial capacity. The Supreme Court
9 AIR 1961 S.C. 1669
10[AIR 1963 SC 677]
32 / 51
sat 901. wp 7804-2021
referring to the celebrated commentary of H.M. Seervai in his book
"Constitutional Law of India" (Forth Edition) while discussing the tests for
identifying judicial functions wherein the learned Author quoted a passage
from Prof. de Smiths Judicial Review pg 1502, to the following effect:
"An authority acts in a judicial capacity when, after investigation and
deliberation, it performs an act or makes a decision that is binding
and conclusive and imposes obligation upon or affects the rights of
individuals."
The Supreme Court also considered the issue as to whether even if the
provisions of Section 245N(a)(iii) provided that the ruling of the AAR shall
be binding on the persons specified under Section 245S, would it denude
the powers of the judicial review vested in the High Court under Articles
226/ 227 of the Constitution. The Supreme Court referring to the
Constitution Bench Judgment of the Supreme Court in L.Chandra Kumar V.
Union of India11 held that the power vested in the High Courts to exercise
judicial superintendence over the decisions of all courts and tribunals
within their respective jurisdictions is part of the basic structure of the
Constitution. It was therefore, held that a proposition that an advance
ruling of the authority should not be permitted to be challenged before the
High Court under Articles 226 and/or 227 of the Constitution would be to
negate a part of the basic structure of the Constitution. The observations in
that regard are required to be noted which read thus:-
11 (1997)3 SCC 261
33 / 51
sat 901. wp 7804-2021
"15. As Section 245-S expressly makes the Advance Ruling binding
on the applicant, in respect of the transaction and on the
Commissioner and the income tax authorities subordinate to him, the
Authority is a body acting in judicial capacity. H.M. Seervai in his book
"Constitutional Law of India" (Forth Edition) while discussing the tests
for identifying judicial functions in paragraph 16.99 quotes the
following passage from Prof. de Smiths Judicial Review on page 1502:
"An authority acts in a judicial capacity when, after
investigation and deliberation, it performs an act or makes a
decision that is binding and collusive and imposes obligation
upon or affects the rights of individuals."
We have, therefore, no doubt in our mind that the Authority is a body
exercising judicial power conferred on it by Chapter XIX-B of the Act
and is a tribunal within the meaning of the expression in Articles 136
and 227 of the Constitution.
... .. .. .. .
17. Considering the settled position of law that the powers of this
Court under Article 136 of the Constitution and the powers of the
High Court under Articles 226 and 227 of the Constitution could not
be affected by the provisions made in a statute by the Legislature
making the decision of the tribunal final or conclusive, we hold that
sub-section (1) of Section 245S of the Act, insofar as, it makes the
advance ruling of the Authority binding on the applicant, in respect of
the transaction and on the Commissioner and income-tax authorities
subordinate to him, does not bar the jurisdiction of this Court under
Article 136 of the Constitution or the jurisdiction of the High Court
under Articles 226 and 227 of the Constitution to entertain a
challenge to the advance ruling of the Authority.
.... ... ... .
19. In L. Chandra Kumar v. Union of India and Others (1997)3
SCC 261, a Constitution Bench of this Court has held that: (SCC
pp.301-02, para 79)
"79. ... .. ... the power vested in the High Courts to exercise
judicial superintendence over the decisions of all courts and
tribunals within their respective jurisdictions is also part of the
basic structure of the Constitution."
Therefore, to hold that an advance ruling of the authority should not
be permitted to be challenged before the High Court under Articles
226 and/or 227 of the Constitution would be to negate a part of the
basic structure of the Constitution. Nonetheless, we do understand the
apprehension of the Authority that a writ petition may remain pending
in the High Court for years, first before a learned Single Judge and
34 / 51
sat 901. wp 7804-2021
thereafter in Letters Patent Appeal before the Division Bench and as a
result the object of Chapter XIX-B of the Act which is to enable an
applicant to get an advance ruling in respect of a transaction
expeditiously would be defeated. We are, thus, of the opinion that
when an advance ruling of the Authority is challenged before the High
Court under Articles 226 and/or 227 of the Constitution, the same
should be heard directly by a Division Bench of the High Court and
decided as expeditiously as possible.
.........
21. Article 136 of the Constitution itself states that this Court may,
"in its discretion", grant special leave to appeal from any order passed
or made by any court or tribunal in the territory of India. The words
"in its discretion" in Article 136 of the Constitution makes the exercise
of the power of this Court in Article 136 discretionary. Hence, even if
good grounds are made out in a Special Leave Petition under Article
136 for challenge to an advance ruling given by the Authority, this
Court may still, in its discretion, refuse to grant special leave on the
ground that the challenge to the advance ruling of the authority can
also be made to the High Court under Articles 226 and/or 227 of the
Constitution on the self same grounds. In fact, in Sirpur Paper Mills
Ltd. v. Commissioner of Wealth Tax, Hyderabad [AIR 1970 SC 1520] it
has been observed that this Court does not encourage an aggrieved
party to appeal directly to this Court against the order of a Tribunal
exercising judicial functions unless it appears to the Court that a
question of principle of great importance arises. Unless, therefore, a
Special Leave Petition raises substantial questions of general
importance or a similar question is already pending before this Court
for decision, this Court does not entertain a Special Leave Petition
directly against an order of the tribunal."
22. Thus the position in law as held by the Supreme Court is quite
clear that the AAR was held to be a a body exercising judicial power as
conferred on it by Chapter XIX-B of the Act and was a tribunal within the
meaning of the expression in Articles 136 and 227 of the Constitution. In
my opinion, the law as expounded by the Supreme Court in Columbia
Sportswear Company (supra) is squarely applicable in the present context,
for this Court to come to a conclusion that the Insurance Ombudsman is a
35 / 51
sat 901. wp 7804-2021
tribunal within the meaning of Article 227 of the Constitution, considering
that the provisions of Rule 17(6) read with 17(8) of the Insurance
Ombudsman Rule 2017 are not different from the provisions of Section
245N(a)(iii) of the Income Tax Act,1961 which mandates that ruling of
AAR shall be binding on the persons specified in Section 245S. It thus
cannot be held that the petitioner would not have a remedy under Article
227 to assail the orders passed by the Insurance Ombudsman which in fact
adjudicates a lis and determines the rights of the parties namely between
that of the complainant/respondent No.2 and the Insurance company on
the other hand.
23. I am, therefore, of the considered view that as the adjudication of a
complaint before the Insurance Ombudsman possesses all essentials of a
judicial/quasi judicial adjudication akin to an adjudication by a tribunal. It
thus may not be an acceptable proposition that merely because Sub-Rule
(8) of Rule 17 provides that an award shall be binding on the insurer, the
insurer would be precluded from assailing the award by invoking the
jurisdiction of this Court under Article 227 being a remedy as guaranteed
by the Constitution, more particularly, being an adjudication governed by
statutory rules as noted above. The question No. (i) as noted in paragraph
(3) would accordingly stand answered.
36 / 51
sat 901. wp 7804-2021
24. In view of the above discussion and clear position in law as
laid down by the Supreme Court, I respectfully do not find myself to be in
agreement with the view taken by the learned Single Judge of the Calcutta
High Court in Life Insurance Corporation of India vs. The Insurance
Ombudsman (supra) that a writ petition under Article 227 of the
Constitution against an award passed by the Ombudsman would not be
maintainable, when the Court observed thus:-
"15. The three circulars read together emphasize the anxiety of the
IRDA to have an efficient resolution of insurance disputes as
expeditiously as possible. It urges the insurers to honour, inter alia, an
award of the Insurance Ombudsman. It does not provide an opportunity
or a licence to the insurer to challenge the award of the Insurance
Ombudsman in any proceedings. Quite to the contrary, it advises the
insurer to honour it. The Rules of 1998 does not contemplate a challenge
to the award of an insurance Ombudsman at the behest of the insurer. It
allows the insurer not to comply with the award when the same is
challenged at the behest of the complainant. The Rules of 1998 and the
three circulars of IRDA does not envisage or recognize that, the insurer
would be a party aggrieved by an award passed by the Insurance
Ombudsmen acting under the Rules of 1998."
25. Having held the writ petition to be maintainable, now the Petitioner's
case on merits needs to be examined. It appears to be clear that the
'proposal form' as described by the insured specifically provided for
columns in which the deceased insured was required to furnish all the
necessary details in regard to his past medical history. Column 14, titled as
37 / 51
sat 901. wp 7804-2021
'Medical History', as noted above, specifically required the insurer to
provide information as to whether in the past five years nearing the said
proposal/application, he had undergone any surgical operation at a
hospital or clinic or had undergone any investigation with other than
normal or negative results. He was also required to specify whether he was
on diet or on any other medicine of any kind as prescribed by a doctor; as
to whether he was undergoing or intending to undergo any treatment; as to
whether he was advised for any surgical operation, procedure or hospital
admission (including x-rays, ECG. Blood tests, biopsies, etc.) Further he
was also required to furnish information as to whether he had suffered any
chest pain with low or high blood pressure, high cholesterol, heart attack,
heart murmur or other heart disorders and submit an appropriate
questionnaire. He was also required to submit information on
dizziness/fainting spells, epilepsy, paralysis, stroke, mental/emotional
disorder or any other neurological disorder. All this information as
required to be furnished by the insured was answered/supplied in the
negative by the insured.
26. It appears to be quite clear from the materials as also the
investigation as revealed by the petitioner in the investigation of the
insured's case, that is from the medical history of the insured, that the
insured was a known case of hypertension as clear from the discharge
38 / 51
sat 901. wp 7804-2021
summary dated 15 August 2015 issued by Saifee Hospital which made the
following remark "K/C/O HTN/PSYCHIATRIC ILLNESS ON MEDICATION".
This apart, he was advised in the discharge summary to continue with the
Tablet Amlopress L for the hypertension (HT) medication. Such discharge
summary pertained to a period of two years prior to the insured making the
insurance proposal in question. The discharge summary referred by
Respondent No.2 dated 31 August 2016 referred under the "head of no
history of hypertension", in my opinion, is wholly inconsistent when there
is no denial to the earlier medical history as revealed from the discharge
summary dated 15 August, 2015 of the Saifee Hospital, Mumbai. Even
otherwise, in the said discharge summary dated 31 August 2016,
hypertension Tablet Amlopress L has been continued. It thus cannot be that
only on one occasion the blood pressure of the insured when hospitalised in
August 2015, was required to be controlled. Also there appears to be no
dispute on the certificate of Dr. Hozefa A. Bhinderwala, Consultant
Psychiatrist dated 9 January 2020 who certified that the deceased insured
was under his treatment for schizophrenia since 2013. It is also clear from
the prescription of Dr. Kedar Toraskar that he continued the hypertension
medication. Further, the death summary as issued by Saifee Hospital refers
to the clinical history of the deceased as under :
"Clinical Summary
39 / 51
sat 901. wp 7804-2021
2/M, K/C/O DM/HTN/ Psychiatric disorder; on treatment
Admitted with c/o dizziness f/b loss of consciousness which lasted for 5
mins and subsided on its own
During the episode as per relatives rigidity in both ul and II
On 16/10/19 morning started c/o headache nausea when family
physician took bp- 17096 and hgt 140mg/dl
On investigation - MRA brain wnl / LFT derranged / hyponatremia/USG
abdomen : GB calculli
On 09/10/19 - reports: hyponatremla/ s.creatinine 1.52/hco3 : 10:8/ s.
K: 5.5
Patient was v. drowsy/ restless and decreased u/o --- RRT, was activated
in the evening (9/10/19) i/v/o not responding
CODE Blue activated - requied intubation - ventilatioin:-/ coffee ground
vomiting, with aspiration--- shifted to icu
... tienr - found pallor ++/ unresponsive / on ventilator acidotic
breathing / BP not recordable --- noradrenaline / vasopressine start
/v/o/ still low.bp - adrenaline cadded.
... 3G : severe metabolic acidosis / Hb dropped/ thrombocytopenia ++ ---
4 PCV/FFP/ Platelets transfusion was done
pantodac infusion / NaHCO3 infusion was started..
ice evening 09/10/19 - till 3.20 am (10/10/19) had 5 episodes of cardiac
arrest-- reverted, but his BP remained on lower side
- 70/30 mmHg)
Inspite of all advanced critical care management-- he didn't responded to
the the treatment,
expired on 10/10/19, at 3.20 am"
(emphasis supplied)
27. This apart the expert Dr. C.H. Asrani, as appointed by the
Petitioner, rendered his opinion on the basis of all the documents submitted
to him, clearly opining that as per discharge summary dated 31 August
2015, the insured was a known case of both schizophrenia and
hypertension implying that these ailments were present before 2015. He
also opined that the insured was being treated for schizophrenia since
2013. He also stated that the insured was having regular treatment from his
psychiatrist and gave positive history for being hospitalized in August 2015.
He also opined that, hence, there was a significant non-disclosure on both
40 / 51
sat 901. wp 7804-2021
these counts and that the insured had clearly not disclosed, that he was a
patient of schizophrenia and hypertension. He also recorded that the non-
disclosure of such ailments in the insured's proposal was significant as it
would have led to an altogether different decision by the petitioner as to
whether such proposal of the insured could at all be accepted for a life
insurance policy to be issued to him. He also opined that schizophrenia
patients have high risk of severe infections, including sepsis and the insured
had died due to sepsis.
28. In my opinion, when the above material was available before the
Ombudsman, he ought to have given due regard to the same and on
considering the same in its proper perspective ought to have discussed the
consequence which could be a fall out from such medical material. The
observations and conclusions of the Insurance Ombudsman are bereft of
any reasoning on such material which formed part of the record before
him, they are cryptic, as also extraneous to the issue before him. The
relevant observations leading to the award of the Insurance Ombudsman
are required to be noted which read thus :
"3. Observations and conclusions:
The complainant's husband purchased the above policy in December 2017
and expired in October, 2019. The total premium paid Rs. 10,33,750/- and
the sum assured is Rs. 75,00,000/- Though the claim amount is Rs.
75,00,000/- but the complainant has requested to this Forum vide letter
dated 11.09.2020 to consider it for Rs. 30,00,000/- only
The claimant submitted to the Respondent an application for the Death
41 / 51
sat 901. wp 7804-2021
claim payment. The same was rejected as the policyholder had not
disclosed his medical history at the time of same issuance of the policy and
the same was communicated to the claimant.
The Respondents had repudiated the claim on the basis of the medical
opinion from Dr. C H Asrani, Mumbai wherein it has been mentioned that
the deceased Life Assured was under treatment for Schizophrenia and
Hypertension prior to issuance of the policy. As per hospital records, the
cause of death was septicemia with multi-organ failure. Though deceased
Life assured had taken treatment for Schizophrenia in 2013, but as per
'Harrison's textbooks of Internal Medicine' and medical journals like the
'Indian Journal of Psychiatry' standard duration of treatment for an episode
of schizophrenia is 2-3 years depending on the response of the patient, and
thereafter routine follow-ups. As stated by complainant Life assured was of
sound mind while taking the policy. For such Non-medical underwriting
proposals, Moral Hazard Report by the company's executive is vital and to
be filled diligently by enquiring all past history of the proposer due to high
Sum Assured. In this case, the company's executive was aware of the elbow
supportive brace worn by her husband while signing the documents. The
life assured had a good relationship with HDFC Bank Manager, hence there
is the possibility of their awareness of the medical history of the deceased
Life assured. Proposal form was also filled up by the company's executive.
The Cause of death is septicemia with multi-organ failure which is not
related to the Psychiatric illness and Hypertension. He had taken treatment
for Type 2 DM from Dr. Toraskar in 2019 i.e after taking the policy. Also,
Life assured had already paid two year's premium and had in fact asked for
cancellation of policy since he was interested in single premium mode. It is
observed that the deceased policyholder had no fraudulent intention in not
disclosing the above medical history at the time of going in for insurance in
December 2017. In fact M.H.R. which was essential for the purpose of
underwriting a proposal was not filled up diligently by the Company's
executive. The suppression of material facts by the deceased life assured
has not much relevance with the cause of death of the life assured. The
claim is for Rs. 75 lacs whereas this Forum jurisdiction is for a maximum
claim amount of Rs. 30 lacs. The decision of the Respondent is therefore set
aside by the following Order."
(emphasis supplied)
29. Considering the aforesaid observations, in my opinion, there is
perversity on many counts, on the part of the Insurance Ombudsman in
recording such findings. Firstly, the Insurance Ombudsman has completely
overlooked the basic requirements of the insurance contract, namely, that
there has to be disclosure in good faith which is sine-qua-non for an
42 / 51
sat 901. wp 7804-2021
insurance contract to be enforceable when a claim under such contract is
made. The Ombudsman has, in fact, proceeded on surmises and
conjunctures when he observes that the Life Assured had good relations
with the HDFC Bank Manager, the Petitioner's agent, and hence, there was
a possibility of awareness of the medical history of the deceased insured.
When the Ombudsman further observes that the proposal form was filled
up by the company's executive, is totally extraneous and besides the point,
inasmuch as it was never the case of Respondent No.2 that prior to the
insured's death, the insured had taken a position that he was not aware
about the proposal made by him or his agent and more particularly he was
not aware of the contents of such insurance proposal as made to the
Petitioner. Thus, for Respondent No.2, to subsequently say that the
deceased insured was not aware of the proposal form and/or that the agent
of the Petitioner had filled up the online form, in my opinion, is absolutely
untenable and accepting such case of respondent no. 2 by the Insurance
Ombudsman, in my opinion, is a glaring perversity. Such reasoning of the
Insurance Ombudsman lacks both legal and factual logic. This more
significantly, when the insured was himself a medical practitioner by
profession. It was, therefore, totally unacceptable for the Ombudsman to
observe that the proposal form was not filled up by the insured but by the
petitioner's agent which was to the knowledge of the Petitioner would
43 / 51
sat 901. wp 7804-2021
make the insurance contract valid. If it was to be the case that the insured
had not himself filled up the proposal form, Respondent No.2 herself was
not in position to make any claim as the contract itself was fundamentally
not enforceable as being not made by the deceased insured in the manner
as the law would require. However, this is certainly not the case of
respondent No.2.
30. The second fundamental error on the part of the Ombudsman
is not to relate the cause of death to the ailments as suffered by the insured,
namely, septicemia and multiple organ failure on the ground that the
insured had taken treatment for Type-2 diabetes, schizophrenia and
hypertension. The entire medical material, in fact, was clear to the effect
that since 2013, the insured was suffering from schizophrenia and
hypertension, as also he was a known case of hypertension, which could
lead to vulnerability to severe infection such as septicemia. It is certainly
quite astonishing to note that the Insurance Ombudsman has observed that
the deceased policy holder had no fraudulent intention in not disclosing the
medical history at the time of going in for insurance in December 2017. It is
unconscionable as to how such observations could be made and without
any supporting material and merely on the basis that the proposal form was
filled up by the agent's executive, so as to come to a conclusion that the
non-disclosure of material facts by the deceased insured did not have any
44 / 51
sat 901. wp 7804-2021
relevance with the cause of death of the life assured. Such finding of the
Insurance Ombudsman amounts to an ex facie perversity. Thus, in so far as
the merits are concerned, in my opinion, looked from any angle, the
impugned award passed by the Ombudsman is wholly perverse and
unconscionable and hence, cannot be sustained even on merits.
31. It is a settled principle of law that a contract of insurance is
governed by the principle of utmost good faith namely by the doctrine of
uberrima fidae which would imply that all parties to an insurance contract
must deal in good faith, making a true declaration of all material facts in
the insurance proposal. In the present case, the deceased insured had
certainly not disclosed material information. In the context of a party to an
insurance contract lacking in making disclosure, learned Counsel for the
Petitioner would be correct in placing reliance on the Supreme Court in
Reliance Life Insurance Company Ltd. vs. Rekhaben Nareshbhai Rathod
(supra) wherein the Supreme Court taking a review of the legal position on
the principles of an insurance contract has observed that even an incorrect
statement which may not be a suppression of a material fact, could be
enough for the insurance company to repudiate the contract of insurance
policy. In such context, in paragraphs 28, 29, 30, 31, 32 and 36, the
relevant observations as made by the Supreme Court are required to be
noted, which read thus :
45 / 51
sat 901. wp 7804-2021
"28. Materiality of a fact also depends on the surrounding
circumstances and the nature of information sought by the insurer. It
covers a failure to disclose vital information which the insurer
requires in order to determine firstly, whether or not to assume the
risk of insurance, and secondly, if it does accept the risk, upon what
terms it should do so. The insurer is better equipped to determine the
limits of risk-taking as it deals with the exercise of assessments on a
day-to-day basis. In a contract of insurance, any fact which would
influence the mind of a prudent insurer in deciding whether to accept
or not accept the risk is a material fact. If the proposer has
knowledge of such fact, she or he is obliged to disclose it particularly
while answering questions in the proposal form. An inaccurate
answer will entitle the insurer to repudiate because there is a
presumption that information sought in the proposal form is material
for the purpose of entering into a contract of insurance.
29. Contracts of insurance are governed by the principle of utmost
good faith. The duty of mutual fair dealing requires all parties to a
contract to be fair and open with each other to create and maintain
trust between them. In a contract of insurance, the insured can be
expected to have information of which she/he has knowledge. This
justifies a duty of good faith, leading to a positive duty of disclosure.
The duty of disclosure in insurance contracts was established in a
King's Bench decision in Carter v. Boehm [Carter v. Boehm, (1766) 3
Burr 1905 : 97 ER 1162] , where Lord Mansfield held thus: (ER p.
1164)
"Insurance is a contract upon speculation. The special facts, upon
which the contingent chance is to be computed, lie most commonly
in the knowledge of the insured only; the underwriter trusts to his
representation, and proceeds upon confidence that he does not keep
back any circumstance in his knowledge, to mislead the underwriter
into a belief that the circumstance does not exist, and to induce him
to estimate the risque, as if it did not exist."
30. It is standard practice for the insurer to set out in the application
a series of specific questions regarding the applicant's health history
and other matters relevant to insurability. The object of the proposal
form is to gather information about a potential client, allowing the
insurer to get all information which is material to the insurer to know
in order to assess the risk and fix the premium for each potential
client. Proposal forms are a significant part of the disclosure
procedure and warrant accuracy of statements. Utmost care must be
exercised in filling the proposal form. In a proposal form the
applicant declares that she/he warrants truth. The contractual duty
so imposed is such that any suppression, untruth or inaccuracy in the
statement in the proposal form will be considered as a breach of the
duty of good faith and will render the policy voidable by the insurer.
The system of adequate disclosure helps buyers and sellers of
46 / 51
sat 901. wp 7804-2021
insurance policies to meet at a common point and narrow down the
gap of information asymmetries. This allows the parties to serve their
interests better and understand the true extent of the contractual
agreement.
31. The finding of a material misrepresentation or concealment in
insurance has a significant effect upon both the insured and the
insurer in the event of a dispute. The fact it would influence the
decision of a prudent insurer in deciding as to whether or not to
accept a risk is a material fact. As this Court held in Satwant Kaur
[Satwant Kaur Sandhu v. New India Assurance Co. Ltd., (2009) 8
SCC 316 : (2009) 3 SCC (Civ) 366] "there is a clear presumption that
any information sought for in the proposal form is material for the
purpose of entering into a contract of insurance". Each representation
or statement may be material to the risk. The insurance company
may still offer insurance protection on altered terms.
32. In the present case, the insurer had sought information with
respect to previous insurance policies obtained by the assured. The
duty of full disclosure required that no information of substance or of
interest to the insurer be omitted or concealed. Whether or not the
insurer would have issued a life insurance cover despite the earlier
cover of insurance is a decision which was required to be taken by
the insurer after duly considering all relevant facts and
circumstances. The disclosure of the earlier cover was material to an
assessment of the risk which was being undertaken by the insurer.
Prior to undertaking the risk, this information could potentially allow
the insurer to question as to why the insured had in such a short span
of time obtained two different life insurance policies. Such a fact is
sufficient to put the insurer to enquiry.
36. Finally, the argument of the respondent that the signatures of the
assured on the form were taken without explaining the details cannot
be accepted. A similar argument was correctly rejected in a decision
of a Division Bench of the Mysore High Court in V.K. Srinivasa Setty v.
Premier Life and General Insurance Co. Ltd. [V.K. Srinivasa Setty v.
Premier Life and General Insurance Co. Ltd. , 1957 SCC OnLine Kar
27 : AIR 1958 Mys 53] where it was held: (SCC OnLine Kar paras 80-
81)
"80. Now it is clear that a person who affixes his signature to a
proposal which contains a statement which is not true, cannot
ordinarily escape from the consequence arising therefrom by
pleading that he chose to sign the proposal containing such
statement without either reading or understanding it. That is
because, in filling up the proposal form, the agent normally,
ceases to act as agent of the insurer but becomes the agent of the
insured and no agent can be assumed to have authority from the
47 / 51
sat 901. wp 7804-2021
insurer to write the answers in the proposal form.
81. If an agent nevertheless does that, he becomes merely the
amanuensis of the insured, and his knowledge of the untruth or
inaccuracy of any statement contained in the form of proposal
does not become the knowledge of the insurer. Further, apart from
any question of imputed knowledge, the insured by signing that
proposal adopts those answers and makes them his own and that
would clearly be so, whether the insured signed the proposal
without reading or understanding it, it being irrelevant to
consider how the inaccuracy arose if he has contracted, as the
plaintiff has done in this case that his written answers shall be
accurate."
(emphasis supplied)
32. In a subsequent decision of a three Judge Bench of the
Supreme Court in Branch Manager, Bajaj Allianz (supra), the Supreme
Court reiterated the principles that the contract of insurance is one
executed in utmost good faith and the proposer who seeks to obtain a
policy of life insurance is duty bound to disclose all material facts bearing
upon the issue as to whether the insurer would consider it appropriate to
assume the risk which is proposed. It was observed that it is with this
principle in view, that the proposal form requires a specific disclosure of
pre-existing ailments, so as to enable the insurer to arrive at considered
decision based on the actuarial risk. In paragraphs 9, 12 and 13, the
Supreme Court observed the effects of non-observation as under :
"9. A contract of insurance is one of utmost good faith. A proposer who seeks
to obtain a policy of life insurance is duty bound to disclose all material facts
bearing upon the issue as to whether the insurer would consider it
appropriate to assume the risk which is proposed. It is with this principle in
view that the proposal form requires a specific disclosure of pre-existing
ailments, so as to enable the insurer to arrive at a considered decision based
on the actuarial risk. In the present case, as we have indicated, the proposer
failed to disclose the vomiting of blood which had taken place barely a
48 / 51
sat 901. wp 7804-2021
month prior to the issuance of the policy of insurance and of the
hospitalization which had been occasioned as a consequence. The
investigation by the insurer indicated that the assured was suffering from a
pre-existing ailment, consequent upon alcohol abuse and that the facts which
were in the knowledge of the proposer had not been disclosed. This brings
the ground for repudiation squarely within the principles which have been
formulated by this Court in the decisions to which a reference has been made
earlier. In Life Insurance Corporation of India v. Asha Goel, this Court held:
"12...The contracts of insurance including the contract of life
assurance are contracts uberrima fides and every fact of material ( sic
material fact) must be disclosed, otherwise, there is good ground for
rescission of the contract. The duty to disclose material facts continues
right up to the conclusion of the contract and also implies any material
alteration in the character of risk which may take place between the
proposal and its acceptance. If there is any misstatements or
suppression of material facts, the policy can be called into question. For
determination of the question whether there has been suppression of
any material facts it may be necessary to also examine whether the
suppression relates to a fact which is in the exclusive knowledge of the
person intending to take the policy and it could not be ascertained by
reasonable enquiry by a prudent person."
12. ... ... ...
13. The medical records which have been obtained during the course of the
investigation clearly indicate that the deceased was suffering from a serious
preexisting medical condition which was not disclosed to the insurer. In fact,
the deceased was hospitalized to undergo treatment for such condition in
proximity to the date of his death, which was also not disclosed in spite of
the specific queries relating to any ailment, hospitalization or treatment
undergone by the proposer in Column 22 of the policy proposal form. We
are, therefore, of the view that the judgment of the NCDRC in the present
case does not lay down the correct principle of law and would have to be set
aside. We order accordingly."
(emphasis supplied)
Applying the principles of law as laid down by the Supreme Court in
the above decisions to the facts of the present case, it is quite clear that the
insurance contract in question itself stood vitiated and was rightly
repudiated by the petitioner.
33. Apart from the above discussion, there is much substance in the
49 / 51
sat 901. wp 7804-2021
contention as urged on behalf of the petitioner that Ombudsman ought to
have rejected the complaint as made by respondent no.2 for the reason that
the claim as made by respondent No.2 for compensation of Rs.75 lakhs,
which was beyond the pecuniary jurisdiction of Insurance Ombudsman, in
view of the proviso to sub-rule (3) of Rule 17 which restricted the
jurisdiction of the Insurance Ombudsman to Rs.30 lakhs. Thus, at the
threshold the Insurance Ombudsman has no jurisdiction to entertain the
complaint of respondent No.2. However, it appears that respondent No.2
intended to bring the complaint within the jurisdiction of the Insurance
Ombudsman and for such purpose respondent No.2 by her letter dated 11
September 2020 as addressed to the Ombudsman stated that she would be
satisfied with the amount of Rs.30 lakhs. The Insurance Ombudsman
accepting such letter that the claim itself was for an amount of Rs.30 lakhs
held the complaint to be maintainable. In my opinion, such approach on
the part of the Insurance Ombudsman was objectionable for more than one
reason. As seen from the reading of respondent No.2's letter dated 11
September 2020, respondent no. 2 has stated that she would be satisfied
with an amount of Rs.30 lakhs to be settled by the Ombudsman. In my
opinion, such letter of respondent no. 2 was a settlement proposal not an
amendment of the claim as made by respondent No.2 which was for an
amount of Rs.75 lakhs. Thus, the fact remains that the principal claim of
50 / 51
sat 901. wp 7804-2021
respondent No.2 even on respondent No.2's showing as contained in the
said letter, continued to be for an amount of Rs.75 lakhs, implying that the
Insurance Ombudsman per se had no jurisdiction to entertain such
complaint. It needs to be observed that this is not a situation that a party
rightfully invoking the pecuniary jurisdiction of the forum, has agreed to
reduce or settle its claim at a lower amount, which would be permissible, it
is however, quite reverse, as respondent No.2 filed a complaint making a
claim of Rs.75 lakhs which was beyond the pecuniary jurisdiction of the
Ombudsman and subsequently, intends to settle at a lower amount. This by
no means would amount to curing the fundamental defect on the
complaint, namely, that the complaint remained to be a complaint claiming
Rs.75 lakhs, which the Ombudsman had no jurisdiction to entertain being
beyond his pecuniary jurisdiction under the rules.
34. Thus, with quite certainty the above discussion would lead this Court
to come to the conclusion that the writ petition needs to succeed.
Accordingly, the impugned award dated 31 December 2020 passed by the
Insurance Ombudsman is quashed and set aside. Rule is made absolute in
such terms. No costs.
(G. S. KULKARNI, J.)
51 / 51
