Karnataka High Court
M/S Toyota Kirloskar Motor Pvt Ltd vs The Insurance Ombudsman on 4 July, 2024
R
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 04TH DAY OF JULY, 2024
BEFORE
THE HON'BLE MR. JUSTICE K. V. ARAVIND
WRIT PETITION No.4160/2019 (GM-AC)
BETWEEN:
M/S. TOYOTA KIRLOSKAR MOTOR PVT. LTD.,
PLOT No.1, BIDADI INDUSTRIAL AREA,
BIDADI, RAMANAGAR DISTRICT-562 109.
REPRESENTED BY ITS GENERAL MANAGER,
EMPLOYEE RELATIONS,
SRI G. SHANKARA.
...PETITIONER
(BY SRI SOMASHEKAR, ADVOCATE FOR
SRI S. N. MURTHY, ADVOCATE)
AND:
1. THE INSURANCE OMBUDSMAN
FOR THE STATE OF KARNATAKA,
19/19, JEEVAN SOUDHA BUILDING,
GROUND FLOOR, 24TH MAIN,
J.P. NAGAR 1ST PHASE,
BENGALURU 560 078.
2. M/S. UNITED INDIA INSURANCE CO. LTD.,
DIVISIONAL OFFICE, No.9,
10/4, MITHRA TOWERS,
KASTURBA ROAD,
BENGALURU 560 001.
REP. BY ITS MANAGER.
2
3. MR. CHANDRASHEKAR K.S.,
AGED ABOUT 40 YEARS,
T.M. No.1155,
TOYOTA KIRLOSKAR MOTOR PVT. LTD.,
PLOT No.1, BIDADI INDUSTRIAL AREA,
BIDADI,
RAMANAGAR DISTRICT 562 109.
...RESPONDENTS
(R1 SERVED;
SRI JANARDHAN REDDY, ADVOCATE FOR R2;
SRI K.B. NARAYANA SWAMY, ADVOCATE FOR R3)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT R1
TO ISSUE NOTICE TO THE PETITIONER ON ANY CLAIM PETITION
THAT MAY BE FILED BY R3 OR ANY OTHER EMPLOYEE BEFORE
R1 AND QUASH THE AWARD DATED 02.01.2019 PASSED BY R1
AT ANNEXURE-F TO THIS WRIT PETITION.
THIS WRIT PETITION HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 07.06.2024, THIS DAY THE COURT
PRONOUNCED THE FOLLOWING:
ORDER
This writ petition seeking the following prayers;
"a) Writ of mandamus to the first respondent
directing the first respondent to issue notice to
the petitioner on any claim petition that may
be filed by the third respondent or any other
employee before the first respondent; and
b) further issue a writ in the nature of certiorari
or any other writ or order and quash the Award
bearing No.10/BNG/A/G1/0314/2018-19 dated
02.01.2019 passed by the first respondent at
Annexure 'F' to this writ petition; and
c) pass such other appropriate order as deemed
fit to grant in the facts and circumstances of
the case, in the interest of justice."
2. The petitioner is a company engaged in manufacture
of motor vehicles. The petitioner has contracted "Group
Personal Accident Tailor Made Policy" with respondent No.2-
United India Insurance Company Limited to cover all the
employees of the company when they suffer bodily injuries.
The benefit is available even in case of death of an
employee. It is stated that the policy would cover injuries
suffered even beyond working place and hours. The benefit
is available even to death cases outside working place.
3. The premium is negotiated by the petitioner with the
Insurance Company on the basis of the claims made by the
employees in the previous year. Depending on the amount
of compensation paid by the Insurance Company in the
previous year, the Insurance Company would calculate,
negotiate and fix the premium for the next year.
4. The employees directly make a claim with the
Insurance Company. The Insurance Company on
examination of the reports would determine the
compensation to be payable. In the event of any dispute
with the compensation determined by the Insurance
Company, the employee would file a claim before the
Ombudsman under the Insurance Ombudsman Rules, 2017
(hereinafter referred to as 'Rules, 2017'). The Ombudsman
after considering the claim made by the employee,
documents in support of such claim and the contentions of
the Insurance Company would determine the compensation
to be payable.
5. It is the specific case of the petitioner that, the
petitioner is a stakeholder incurring civil liability. The
petitioner should be provided an opportunity before the
Ombudsman.
6. Learned Senior counsel Sri. S.N.Murthy appearing on
behalf of Sri.Somashekar, learned counsel for the petitioner
submits that premium towards insurance policy is
contributed by the petitioner. The premium for the next
year is determined by the Insurance Company on the basis
of the quantum of compensation disbursed in the previous
year, the petitioner is necessary party before the
Ombudsman. It is submitted that there are instances of
incorrect, fake or high compensation being claimed by the
employees on the basis of unreliable and unverified
documents. In such situation, due to the said wrong claims
of the employees, the petitioner is suffering in the form of
contributing higher premium. The insurance benefit is
provided to the employees for their genuine claims. In view
of certain employees making abusive claims, the same can
be avoided by providing an opportunity before the
Ombudsman. The presence of the petitioner before the
Ombudsman would be for the welfare of the employees and
in the interest of Insurance Company as well and the object
and purpose of extending insurance benefit would be
achieved.
7. Learned Senior counsel appearing for the petitioner
submits that though the petitioner has raised contentions
with reference to the manner of quantification of the award
and the quantum of award itself is in dispute, the same is
not being pressed in the present petition.
Submission is placed on record.
8. Respondent No.1 is served and unrepresented.
9. Sri Janardhan Reddy, learned counsel for respondent
No.2 submits that the presence of employer before
respondent No.1-Insurance Ombudsman would not
prejudice the rights of any of the parties. In fact, the same
would assist the Insurance Company in avoiding any fake or
incorrect claims.
10. Sri K.B.Narayana Swamy, learned counsel for
respondent No.3-claimant in the present case would submit
that insurance is provided by the petitioner for the welfare
of the employees. The employees are bound to make use
of the said benefit towards genuine claims. It is submitted
that presence of the petitioner before the Insurance
Ombudsman would avoid any incorrect or bogus claims as
the petitioner would be in a better position to verify the
genuineness and correctness of the claims.
11. Heard learned counsel for the parties and perused the
writ petition papers.
12. The petitioner has contracted policy called "Group
Personal Accident Tailor Made Policy" with respondent No.2-
Insurance Company for the benefit of its employees. The
narrow dispute in this petition is as to whether the
petitioner being an employer having made contribution to
the policy is required to be heard by respondent No.1-
Insurance Ombudsman while adjudicating the dispute under
Rules 14 and 15 of the Rules, 2017, which reads as under;
"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.
(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
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."
13. Rule 14 provides for complaint by any person against
an insurer on the grievance. Sub-Rule (3) of Rule 14
provides for complaint before the Insurance Ombudsman.
Rule 15 provides for power of the Insurance Ombudsman.
Sub-Rule (4) of Rule 15 provides for disposal of a complaint
after giving the parties to the dispute a reasonable
opportunity of being heard.
14. On conjoint reading of Rule 14(1) and Rule 15(4), it is
clear that the employer who has contributed premium is not
provided an opportunity in the proceedings unless the
employer has the grievance against the insurer.
15. The submission of learned counsel for the petitioner
that premium to the subject policy is contributed by the
petitioner is not in dispute. It is the case of the petitioner
that premium for the year would be negotiated and fixed by
the Insurance Company on the basis of the total amount of
compensation awarded by the Insurer in the previous year.
It is clear that the compensation paid by the Insurance
Company to settle claims of the employees of the petitioner
will have financial implications on the petitioner/employer in
a form of contribution of higher premium. In such
circumstances, this Court has to consider the prayer of the
petitioner to provide an opportunity of being heard before
the Insurance Ombudsman in the absence of specific
provision providing such opportunity.
16. The Hon'ble Supreme Court in the case of State of
U.P. v. Sudhir Kumar Singh, (2021) 19 SCC 706, has
held as follows:
"42. An analysis of the aforesaid judgments thus
reveals:
42.1. Natural justice is a flexible tool in the hands of
the judiciary to reach out in fit cases to remedy
injustice. The breach of the audi alteram partem rule
cannot by itself, without more, lead to the conclusion
that prejudice is thereby caused.
42.2. Where procedural and/or substantive provisions
of law embody the principles of natural justice, their
infraction per se does not lead to invalidity of the
orders passed. Here again, prejudice must be caused
to the litigant, except in the case of a mandatory
provision of law which is conceived not only in
individual interest, but also in public interest.
42.3. No prejudice is caused to the person
complaining of the breach of natural justice where
such person does not dispute the case against him or
it. This can happen by reason of estoppel,
acquiescence, waiver and by way of non-challenge or
non-denial or admission of facts, in cases in which the
Court finds on facts that no real prejudice can
therefore be said to have been caused to the person
complaining of the breach of natural justice.
42.4. In cases where facts can be stated to be
admitted or indisputable, and only one conclusion is
possible, the Court does not pass futile orders of
setting aside or remand when there is, in fact, no
prejudice caused. This conclusion must be drawn by
the Court on an appraisal of the facts of a case, and
not by the authority who denies natural justice to a
person.
42.5. The "prejudice" exception must be more than a
mere apprehension or even a reasonable suspicion of
a litigant. It should exist as a matter of fact, or be
based upon a definite inference of likelihood of
prejudice flowing from the non-observance of natural
justice."
In SBI v. Rajesh Agarwal, (2023) 6 SCC 1,
"40. ................ It is now a settled principle of law
that the rule of audi alteram partem applies to
administrative actions, apart from judicial and quasi-
judicial functions. [A.K. Kraipak v. Union of India,
(1969) 2 SCC 262; St. Anthony's College v. Rev. Fr.
Paul Petta, 1988 Supp SCC 676 : 1989 SCC (L&S) 44;
Uma Nath Pandey v. State of U.P., (2009) 12 SCC 40
: (2010) 1 SCC (Cri) 501.] It is also a settled position
in administrative law that it is mandatory to provide
for an opportunity of being heard when an
administrative action results in civil consequences to a
person or entity.
41. In State of Orissa v. Binapani Dei [State of Orissa
v. Binapani Dei, AIR 1967 SC 1269] , a two-Judge
Bench of this Court held that every authority which
has the power to take punitive or damaging action has
a duty to give a reasonable opportunity to be heard.
This Court further held that an administrative action
which involves civil consequences must be made
consistent with the rules of natural justice : (AIR p.
1271, para 9)
"9. ... The rule that a party to whose
prejudice an order is intended to be passed is
entitled to a hearing applies alike to judicial
tribunals and bodies of persons invested with
authority to adjudicate upon matters
involving civil consequences. It is one of the
fundamental rules of our constitutional set-up
that every citizen is protected against
exercise of arbitrary authority by the State or
its officers. Duty to act judicially would
therefore arise from the very nature of the
function intended to be performed : it need
not be shown to be super-added. If there is
power to decide and determine to the
prejudice of a person, duty to act judicially is
implicit in the exercise of such power. If the
essentials of justice be ignored and an order
to the prejudice of a person is made, the
order is a nullity. That is a basic concept of
the rule of law and importance thereof
transcends the significance of a decision in
any particular case."
42. In Maneka Gandhi v. Union of India [Maneka
Gandhi v. Union of India, (1978) 1 SCC 248] , a
seven-Judge Bench of this Court held that any person
prejudicially affected by a decision of the authority
entailing civil consequences must be given an
opportunity of being heard. This has been reiterated in
a catena of decisions of this Court."
"45. In Canara Bank v. V.K. Awasthy [Canara Bank v.
V.K. Awasthy, (2005) 6 SCC 321 : 2005 SCC (L&S)
833] , a two-Judge Bench of this Court succinctly
summarised the history, scope, and application of the
principles of natural justice to administrative actions
involving civil consequences in the following terms :
(SCC pp. 331-32, para 14)
"14. Concept of natural justice has
undergone a great deal of change in recent
years. Rules of natural justice are not rules
embodied always expressly in a statute or
in rules framed thereunder. They may be
implied from the nature of the duty to be
performed under a statute. What particular
rule of natural justice should be implied
and what its context should be in a given
case must depend to a great extent on the
fact and circumstances of that case, the
framework of the statute under which the
enquiry is held. The old distinction
between a judicial act and an
administrative act has withered away.
Even an administrative order which
involves civil consequences must be
consistent with the rules of natural justice.
The expression "civil consequences"
encompasses infraction of not merely
property or personal rights but of civil
liberties, material deprivations and non-
pecuniary damages. In its wide umbrella
comes everything that affects a citizen in
his civil life."
(emphasis supplied)
46. There is a consistent pattern of judicial thought
that civil consequences entail infractions not merely of
property or personal rights, but also of civil liberties,
material deprivations, and non-pecuniary damages.
Every order or proceeding which involves civil
consequences or adversely affects a citizen should be
in accordance with the principles of natural justice."
"67. The Master Directions on Frauds do not expressly
exclude a right of hearing to the borrowers before
action to class their account as frauds is initiated. The
principles of natural justice can be read into a statute
or a notification where it is silent on granting an
opportunity of a hearing to a party whose rights and
interests are likely to be affected by the orders that
may be passed.
68. In a decision of a three-Judge Bench of this Court
in Swadeshi Cotton Mills v. Union of India [Swadeshi
Cotton Mills v. Union of India, (1981) 1 SCC 664] , the
issue was whether the Central Government was
required to comply with the requirements of audi
alteram partem before it took over the management
of an industrial undertaking under Section 18-
AA(1)(a) of the Industries (Development and
Regulation) Act, 1951. R.S. Sarkaria, J. speaking for
the majority consisting of himself and D.A. Desai, J.
laid down the following principles of law : (SCC p. 689,
para 44)
"44. In short, the general principle -- as
distinguished from an absolute rule of
uniform application -- seems to be that
where a statute does not, in terms,
exclude this rule of prior hearing but
contemplates a post-decisional hearing
amounting to a full review of the original
order on merits, then such a statute would
be construed as excluding the audi alteram
partem rule at the pre-decisional stage.
Conversely, if the statute conferring the
power is silent with regard to the giving of
a pre-decisional hearing to the person
affected and the administrative decision
taken by the authority involves civil
consequences of a grave nature, and no
full review or appeal on merits against that
decision is provided, courts will be
extremely reluctant to construe such a
statute as excluding the duty of affording
even a minimal hearing shorn of all its
formal trappings and dilatory features at
the pre-decisional stage, unless, viewed
pragmatically, it would paralyse the
administrative progress or frustrate the
need for utmost promptitude. In short, this
rule of fair play 'must not be jettisoned
save in very exceptional circumstances
where compulsive necessity so demands'.
The court must make every effort to
salvage this cardinal rule to the maximum
extent possible, with situational
modifications. But, to recall the words of
Bhagwati, J., the core of it must, however,
remain, namely, that the person affected
must have reasonable opportunity of being
heard and the hearing must be a genuine
hearing and not an empty public relations
exercise."
(emphasis supplied)
"70. In Mangilal v. State of M.P. [Mangilal v. State of
M.P., (2004) 2 SCC 447 : 2004 SCC (Cri) 1085] , a
two-Judge Bench of this Court held that the principles
of natural justice need to be observed even if the
statute is silent in that regard. In other words, a
statutory silence should be taken to imply the need to
observe the principles of natural justice where
substantial rights of parties are affected : (SCC pp.
453-54, para 10)
"10. Even if a statute is silent and there
are no positive words in the Act or the
Rules made thereunder, there could be
nothing wrong in spelling out the need to
hear the parties whose rights and interest
are likely to be affected by the orders that
may be passed, and making it a
requirement to follow a fair procedure
before taking a decision, unless the statute
provides otherwise. The principles of
natural justice must be read into
unoccupied interstices of the statute,
unless there is a clear mandate to the
contrary. No form or procedure should
ever be permitted to exclude the
presentation of a litigant's defence or
stand. Even in the absence of a provision
in procedural laws, power inheres in every
tribunal/court of a judicial or quasi-judicial
character, to adopt modalities necessary to
achieve requirements of natural justice
and fair play to ensure better and proper
discharge of their duties. Procedure is
mainly grounded on the principles of
natural justice irrespective of the extent of
its application by express provision in that
regard in a given situation. It has always
been a cherished principle. Where the
statute is silent about the observance of
the principles of natural justice, such
statutory silence is taken to imply
compliance with the principles of natural
justice where substantial rights of parties
are considerably affected. The application
of natural justice becomes presumptive,
unless found excluded by express words of
statute or necessary intendment. ... Its aim
is to secure justice or to prevent
miscarriage of justice. Principles of natural
justice do not supplant the law, but
supplement it. These rules operate only in
areas not covered by any law validly
made. They are a means to an end and not
an end in themselves."
(emphasis supplied)
"74. The decision of this Court in Swadeshi Cotton
Mills [Swadeshi Cotton Mills v. Union of India, (1981)
1 SCC 664] and K.I. Shephard [K.I. Shephard v. Union
of India, (1987) 4 SCC 431 : 1987 SCC (L&S) 438]
demonstrates that the exigency of a situation is
contextual. The Court must lean in favour of reading
in the principles of natural justice when faced with a
regulatory silence. Any exclusion must be confined to
the narrowest possible limits. The application of the
requirement of a prior hearing could be excluded only
in situations where importing it would have the effect
of paralysing the entire process."
Underlining mine
In Uma Nath Pandey v. State of U.P., (2009) 12
SCC 40,
"3. xxxxxxx
9. The expressions 'natural justice' and
'legal justice' do not present a watertight
classification. It is the substance of justice
which is to be secured by both, and
whenever legal justice fails to achieve this
solemn purpose, natural justice is called in
aid of legal justice. Natural justice relieves
legal justice from unnecessary technicality,
grammatical pedantry or logical
prevarication. It supplies the omissions of a
formulated law. As Lord Buckmaster said, no
form or procedure should ever be permitted
to exclude the presentation of a litigant's
defence.
10. The adherence to principles of natural
justice as recognised by all civilised States is
of supreme importance when a quasi-judicial
body embarks on determining disputes
between the parties, or any administrative
action involving civil consequences is in
issue. These principles are well settled. The
first and foremost principle is what is
commonly known as audi alteram partem
rule. It says that no one should be
condemned unheard. Notice is the first limb
of this principle. It must be precise and
unambiguous. It should apprise the party
determinatively of the case he has to meet.
Time given for the purpose should be
adequate so as to enable him to make his
representation. In the absence of a notice of
the kind and such reasonable opportunity,
the order passed becomes wholly vitiated.
Thus, it is but essential that a party should
be put on notice of the case before any
adverse order is passed against him. This is
one of the most important principles of
natural justice. It is after all an approved
rule of fair play. ..."
"11. Principles of natural justice are those
rules which have been laid down by the
courts as being the minimum protection of
the rights of the individual against the
arbitrary procedure that may be adopted by
a judicial, quasi-judicial and administrative
authority while making an order affecting
those rights. These rules are intended to
prevent such authority from doing injustice."
"14. Concept of natural justice has
undergone a great deal of change in recent
years. Rules of natural justice are not rules
embodied always expressly in a statute or in
rules framed thereunder. They may be
implied from the nature of the duty to be
performed under a statute. What particular
rule of natural justice should be implied and
what its context should be in a given case
must depend to a great extent on the facts
and circumstances of that case, the
framework of the statute under which the
enquiry is held. The old distinction between
a judicial act and an administrative act has
withered away. Even an administrative order
which involves civil consequences must be
consistent with the rules of natural justice.
The expression 'civil consequences'
encompasses infraction of not merely
property or personal rights but of civil
liberties, material deprivations and non-
pecuniary damages. In its wide umbrella
comes everything that affects a citizen in his
civil life."
In Dharampal Satyapal Ltd. v. CCE, (2015) 8 SCC 519 :
"20. Natural justice is an expression of English
Common Law. Natural justice is not a single theory--it
is a family of views. In one sense administering justice
itself is treated as natural virtue and, therefore, a part
of natural justice. It is also called "naturalist"
approach to the phrase "natural justice" and is related
to "moral naturalism". Moral naturalism captures the
essence of commonsense morality--that good and
evil, right and wrong, are the real features of the
natural world that human reason can comprehend. In
this sense, it may comprehend virtue ethics and virtue
jurisprudence in relation to justice as all these are
attributes of natural justice. We are not addressing
ourselves with this connotation of natural justice
here."
"28. It is on the aforesaid jurisprudential premise that
the fundamental principles of natural justice, including
audi alteram partem, have developed. It is for this
reason that the courts have consistently insisted that
such procedural fairness has to be adhered to before a
decision is made and infraction thereof has led to the
quashing of decisions taken. In many statutes,
provisions are made ensuring that a notice is given to
a person against whom an order is likely to be passed
before a decision is made, but there may be instances
where though an authority is vested with the powers
to pass such orders, which affect the liberty or
property of an individual but the statute may not
contain a provision for prior hearing. But what is
important to be noted is that the applicability of
principles of natural justice is not dependent upon any
statutory provision. The principle has to be
mandatorily applied irrespective of the fact as to
whether there is any such statutory provision or not."
"32. xxxxxxx
21. In Board of Mining Examination v.
Ramjee [(1977) 2 SCC 256 : 1977 SCC
(L&S) 226] , the Court has observed that
natural justice is not an unruly horse, no
lurking landmine, nor a judicial cure-all. If
fairness is shown by the decision-maker to
the man proceeded against, the form,
features and the fundamentals of such
essential processual propriety being
conditioned by the facts and circumstances
of each situation, no breach of natural
justice can be complained of. Unnatural
expansion of natural justice, without
reference to the administrative realities
and other factors of a given case, can be
exasperating. The courts cannot look at
law in the abstract or natural justice as
mere artefact. Nor can they fit into a rigid
mould the concept of reasonable
opportunity. If the totality of
circumstances satisfies the court that the
party visited with adverse order has not
suffered from denial of reasonable
opportunity, the court will decline to be
punctilious or fanatical as if the rules of
natural justice were sacred scriptures.
33. In his separate opinion, concurring on this
fundamental issue, K. Ramaswamy, J. echoed the
aforesaid sentiments in the following words : (ECIL
case [(1993) 4 SCC 727 : 1993 SCC (L&S) 1184 :
(1993) 25 ATC 704] , SCC p. 773, para 61)
"61. It is now settled law that the
proceedings must be just, fair and
reasonable and negation thereof offends
Articles 14 and 21. It is well-settled law
that the principles of natural justice are
integral part of Article 14. No decision
prejudicial to a party should be taken
without affording an opportunity or
supplying the material which is the basis
for the decision. The enquiry report
constitutes fresh material which has great
persuasive force or effect on the mind of
the disciplinary authority. The supply of
the report along with the final order is like
a post-mortem certificate with putrefying
odour. The failure to supply copy thereof
to the delinquent would be unfair
procedure offending not only Articles 14,
21 and 311(2) of the Constitution, but
also, the principles of natural justice."
"35. From the aforesaid discussion, it becomes clear
that the opportunity to provide hearing before making
any decision was considered to be a basic requirement
in the court proceeding. Later on, this principle was
applied to other quasi-judicial authorities and other
tribunals and ultimately it is now clearly laid down that
even in the administrative actions, where the decision
of the authority may result in civil consequences, a
hearing before taking a decision is necessary.
xxxxxxx"
"40. In this behalf, we need to notice one other
exception which has been carved out to the aforesaid
principle by the courts. Even if it is found by the court
that there is a violation of principles of natural justice,
the courts have held that it may not be necessary to
strike down the action and refer the matter back to
the authorities to take fresh decision after complying
with the procedural requirement in those cases where
non-grant of hearing has not caused any prejudice to
the person against whom the action is taken.
Therefore, every violation of a facet of natural justice
may not lead to the conclusion that the order passed
is always null and void. The validity of the order has to
be decided on the touchstone of "prejudice". The
ultimate test is always the same viz. the test of
prejudice or the test of fair hearing."
In Union of India v. Col. J.N. Sinha, (1970) 2 SCC 458
at page 460,
"8. xxxxxxx As observed by this Court in A.K.
Kraipak v. Union of India [(1969) 2 SCC 262 : AIR
1970 SC 150] "the aim of rules of natural justice is
to secure justice or to put it negatively to prevent
miscarriage of justice. These rules can operate only
in areas not covered by any law validly made. In
other words they do not supplant the law but
supplement it". It is true that if a statutory provision
can be read consistently with the principles of natural
justice, the courts should do so because it must be
presumed that the Legislatures and the statutory
authorities intend to act in accordance with the
principles of natural justice. But if on the other hand
a statutory provision either specifically or by
necessary implication excludes the application of any
or all the principles of natural justice then the court
cannot ignore the mandate of the Legislature or the
statutory authority and read into the concerned
provision the principles of natural justice. Whether
the exercise of a power conferred should be made in
accordance with any of the principles of natural
justice or not depends upon the express words of the
provision conferring the power, the nature of the
power conferred, the purpose for which it is
conferred and the effect of the exercise of that
power."
17. In view of the law laid down by the Hon'ble Supreme
Court in the above referred judgments, though Rules 14
and 15 of Rules 2017 do not expressly provide an
opportunity to the petitioner/employer in the proceedings,
the principles of natural justice needs to be read into a rule
on granting of an opportunity of being heard. The provision
for opportunity to the petitioner in the proceedings under
Rules 14 and 15 of Rules, 2017 would not in any way
prejudice the rights of the claimant or the insurer. On the
other hand, it would assist the Insurance company to avoid
any possible incorrect/wrong claims by the employees of
the petitioner, thereby achieving the object and purpose of
the policy to the maximum extent.
18. It is settled position as held in the judgments referred
to above in applying the procedural fairness, the petitioner
is to be provided an opportunity of being heard as the
outcome of the proceedings under Rule 14 and 15 of Rules
2017 will have financial implication on the petitioner, as a
result, the petitioner would suffer civil consequences in the
form of higher premium to be paid. It is settled position of
law that even if the statute is silent of granting an
opportunity, the same can be extended to the affected
person unless the grant of such opportunity is specifically
prohibited/restricted under the said statute. The
opportunity can also be further denied if such opportunity
would have the effect of paralyzing the entire process. In
the present case, there is no provision in Rules 2017
specifically restricting the opportunity to the petitioner.
Considering the nature of the contract, claims and the
opportunity agitated by the petitioner, the petitioner's
presence before respondent No.1 would neither prejudice
rights of any of the parties nor paralyse the entire process.
19. On consideration of the legal position as held by the
Hon'ble Apex Court above, this Court is of the opinion that
the employer has the right to be heard in the proceedings
under Rules 14 and 15 of the Rules 2017. To provide an
opportunity to the employer as and when the
claim/complaint is made under Rule 14 of Rules 2017, the
Insurance Ombudsman is bound to issue notice to the
employer/ Company contributed the insurance premium.
The final award can be made under Rule 15 of Rules 2017
on further consideration of the contentions raised by the
employer.
20. In view of the preceding analysis, the following;
ORDER
i) Writ petition is allowed in-part.
ii) The Insurance Ombudsman is directed to notify
the employer before passing the award under
Rule 15 of the Rules 2017 in the pending cases
as well as in the complaints to be filed in future
under Rule 14 of the Rules 2017.
iii) It is open to the parties to make a
representation to competent authority seeking
amendment to the extent stated above to the
Insurance Ombudsman Rules, 2017.
iv) The petitioner to release the amount in favour of
respondent no.3 within three weeks if not
already paid.
Sd/-
JUDGE
mv
