The Oriental Insurance Company Ltd. Regional Office, Ernakulam v. N.S. Gopakumar and Hon'ble Insurance Ombudsman, Ernakulam

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE V.G.ARUN** **MONDAY, THE 30[TH] DAY OF JANUARY 2023 / 10TH MAGHA, 1944 WP(C) NO. 21288 OF 2022** ## **PETITIONER/S:** THE ORIENTAL INSURANCE COMPANY LTD. REGIONAL OFFICE, RAILWAY STATION ROAD, ERNAKULAM NORTH, KOCHI-18, REPRESENTED BY ITS REGIONAL MANAGER. BY ADVS. GEORGE CHERIAN (SR.) K.JACOB MATHEW GEORGE A.CHERIAN ## **RESPONDENT/S:** 1 N.S.GOPAKUMAR S/O LATE SREEKUMAR, ADVOCATE, HILLVALY ESTATE, FLAT NO.A-2, RUBY BLOCK, TRIKKAKARA, KAKKANAD682021. 2 HON`BLE INSURANCE OMBUDSMAN, ERNAKULAM, PIN- 682 015. REPRESENTED BY ITS SECRETARY, PULINAT BUILDINGS, M.G.ROAD, KOCHI682015. BY ADVS. K.SHRIHARI RAO N.SHOBHA **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 17.10.2022, THE COURT ON 30.01.2023 DELIVERED THE FOLLOWING:** W.P.(C) No.21288 of 2022 -2- ## **JUDGMENT** Dated this the 30[th] day of January, 2023 The petitioner is a body corporate engaged in the business of general insurance. The first respondent had subscribed for a medi-claim policy named the PNB Oriental Royal Mediclaim Policy (with family floater) with the petitioner for the period 09.12.2014 to 08.12.2015. The policy period was thereafter renewed continuously for three years, the last renewal was from 09.12.2017 to 08.12.2018. As the policy was due to expire on 08.12.2018, the first respondent approached the Punjab National Bank for renewing the policy. Thereupon, he was informed that the renewal policy premium was enhanced to Rs.19,587/-. Since the premium was only Rs.7172 per annum, the first respondent objected to the steep hike without notice. He also issued Ext.P1 notice demanding that his policy should be renewed by accepting the existing premium. To that, the W.P.(C) No.21288 of 2022 -3- petitioner issued Ext.P2 reply, stating that the revision of premium for the product was nominal considering the medical inflation during the past years and that, being a regulated entity, the company had fixed the premium after obtaining approval from the Regulator. Thereupon, the first respondent filed a complaint before the Grievance Cell of the petitioner. To that, Ext.P3 reply was given, explaining the reason for increase in the premium. Not being satisfied with the reply, the first respondent filed Ext.P5 complaint before the Insurance Ombudsman/second respondent. The complaint was initially dismissed as per Ext.P6 award dated 23.09.2019. The first respondent challenged Ext.P6 in W.P.(C) No.29027 of 2019 and by Ext.P7 judgment, this Court set aside the award and directed the second respondent to reconsider Ext.P5 complaint after affording an opportunity of hearing to the first respondent. Accordingly, the second respondent heard the ## W.P.(C) No.21288 of 2022 -4- parties and passed Ext.P8 award with the ## following directions; _“(1) The Respondent Insurer shall issue to the Complainant a policy covering himself and his eligible family members as per the PNB Oriental Royal Mediclaim policy for a Family Floater Sum Insured of Rs. 500,000 and at the same premium as was charged under policy No.440202/48/2015/3653 that expired on 08.12.2018._ _(2) The new policy shall be issued for a period of one year with effect from the date of payment of premium by the Complainant and shall be for the same coverage as per the PNB Oriental Royal Mediclaim policy or the coverage that most closely approximates the PNB Oriental Royal Mediclaim coverage from among the policies currently offered by the Respondent Insurer. The new policy thus issued shall incorporate all "continuity benefits" as would have been available to the Complainant had his policy been renewed in the normal course from 09.12.2018._ _(3) The Respondent Insurer shall be free to apply any duly approved premium revisions at the time of renewal of the new policy issued as per (1) and (2) above, subject to due advance notice sent to the policy-holder as per regulatory norms.”_ ## W.P.(C) No.21288 of 2022 -5- Aggrieved, this writ petition is filed seeking the following reliefs; _“i) to declare that the Insurance_ _Ombudsman has no power to direct the Insurance company to issue a policy in 2022, accepting pre-revised premium of 2017._ _ii) to set aside Exhibit P8 order to the extent it directs the petitioner to issue a Medi- Claim Policy at the same premium as was charged for the policy expired on 8.12.2018 with continuity of benefits._ _iii) to allow such other writ order or direction which this Hon'ble Court may deem fit and proper in the circumstances of this case in the interest of justice._ _iv) to allow the costs of this proceedings to the petitioner.”_ 2. Senior Advocate George Cherian appearing for the petitioner submitted that the second respondent committed gross illegality in requiring the insurer to renew the first respondent’s policy by accepting the same premium for the policy that expired on 08.12.2018. It is contended that the direction is beyond the powers vested with the second respondent under the ## W.P.(C) No.21288 of 2022 -6- Insurance Ombudsman Rules, 2017 and is contrary to Section 64VB of the Insurance Act. According to the Senior Counsel, the second respondent got carried away by Clause 5.14 of Ext.P10 prospectus for PNB- Oriented Royal Mediclaim, 2017, as per which, any revision or modification in the policy had to be notified to the policy holders three months in advance. The crucial fact that the revision in premium in respect of PNB Oriented Royal Mediclaim Policy-2017 was made effective from 01.01.2018 and the first respondent had renewed his policy from 09.12.2017 to 08.12.2018 by that time and was asked to pay the enhanced premium with effect from 09.12.2018 only was omitted to be noted. The first respondent had renewed his policy up to 08.12.2018 by paying premium as per Ext.P9 prospectus. There is no provision in Ext.P9 which mandate giving of advance notice regarding revision of premium to the policy holders. On the other hand, Clause W.P.(C) No.21288 of 2022 -7- 6(b) of Ext.P9 stipulates that the company may, at its discretion, revise the premium rate and/or the terms and conditions of the policy every year upon renewal thereon. It is also stipulated that renewal of the policy is not automatic and premium due must be paid by the proposer to the company before the due date. Moreover, as per Section 64VB of the Insurance Act, the insurer is authorised to renew a policy only on payment of the premium.The PNB- Oriental Royal Mediclaim, 2017 covered by Ext.P10 prospectus is a new product launched with the approval of the regulator. Hence, the direction to renew the first respondent’s policy by accepting the premium of a product which is no longer in force, is not only illegal but also impossible for performance. The other ground of challenge is that the award was passed without adhering to the principles of natural justice, as also the ## W.P.(C) No.21288 of 2022 -8- mandate to act fairly and equitably stipulated under Rule 15 of the Insurance Ombudsman Rules, 2017. In elaboration, it is submitted that the second respondent had posted the complaint for hearing through video conferencing mode on 24.02.2022. Although submissions on behalf of the petitioner were made on that day, the first respondent did not participate in the hearing. From the award, it is seen that the first respondent was heard over telephone later, without informing the petitioner and without intimating the details of the argument put forth by the first respondent. The award indicates that the first respondent had argued about the requirement of the three months’ notice, though it was not specifically urged as a ground in Ext.P5 complaint. The second respondent had committed an illegality in accepting that argument without affording opportunity to the petitioner to put forth counter arguments. ## W.P.(C) No.21288 of 2022 -9- 3. Adv.K.Shri Hari Rao appearing for the first respondent raised a preliminary objection regarding maintainability of the writ petition by relying on Rule 17(6) of the Insurance Ombudsman Rules, 2017, which require the insurer to comply with the award. The contention is that the petitioner is bound by Ext.P8 award, since the Rules does not envisage a challenge at the instance of the insurer. In support of this contention, reliance is placed on the decision of the High Court of Calcutta in _**LIC of India and**_ _**another v. The Insurance Ombudsman [2017 SCC**_ ## _**OnLine Cal 13172]**_ . It is contended that as per Clause 5.14 of Ext.P10, the petitioner was bound to notify the first respondent regarding the revision or modification in the policy. Merely for the reason that the policy was renewed for the period 9.12.2017 to 08.12.2018, prior to the introduction of Ext.P10, the petitioner is not -10- ## W.P.(C) No.21288 of 2022 exonerated of its responsibility of giving three months notice. As the petitioner had demanded revised premium or renewal of the policy from 09.12.2018 based on Ext.P10, it cannot rely on the terms of Ext.P9 to contend that it was not bound to give advance notice regarding revision of premium. Refuting the allegation that the first respondent did not participate in the online hearing conducted on 24.02.2022, it is submitted that the first respondent was very much present in the online hearing conducted on 24.02.2022. During the course of hearing, there occurred some issues with the audio and video connectivity. Hence, the Ombudsman requested the first respondent to complete the argument over phone. In reply, the first respondent submitted that he had already sent an argument note and has nothing further to submit. Therefore, no further hearing was conducted over telephone. Finally, it is W.P.(C) No.21288 of 2022 -11- contended that the Ombudsman having exercised the discretion vested with it properly, no interference is warranted in exercise of the power of judicial review. 4. As regards the objection regarding maintainability based on Rule 17(6) of the Ombudsman Rules, 2017, I am of the opinion that the said provision cannot be interpreted to mean that the insurer can, under no circumstance, challenge the award of the Insurance Ombudsman. Even in the decision relied on by the first respondent what is stated is that, in view of the in-built mechanism provided under the Rules, the scope of judicial review under Article 226 is very limited and unless the findings and conclusions arrived at by the Ombudsman are patently unfair and palpably perverse, suffers from jurisdictional infirmities and violation of the principles of natural justice, the award is not amenable to the jurisdiction under Article -12- ## W.P.(C) No.21288 of 2022 226. Even if the writ petition is maintainable, there is no serious infirmity or illegality warranting interference. As rightly contended by the learned Counsel for the petitioner, Clause 5.14 of Ext.P10 makes it mandatory for the insurer to notify the policy holders about the revision or modification if any, three months in advance. Hence, after the introduction of Ext.P10 in substitution of Ext.P9, the petitioner was bound to intimate the first respondent regarding the revision of premium. The contention of the learned Senior Counsel that advance intimation was not required since the first respondent had already renewed his policy at the pre-revised rate even after Ext.P10 had come into effect, cannot be countenanced since, irrespective of the date of renewal, the insurer is bound to intimate every policy holder regarding the revision. In the context, the reference in Ext.P8 award, to -13- ## W.P.(C) No.21288 of 2022 the Health Insurance Regulation, 2016 and the Consolidated Product Filing Guidelines for Health Insurance issued by the Insurance Regulatory Development Authority of India (IRDAI) wherein also, there is a requirement of giving 90 days notice to the policy holders in the event of revision in the price of the policy, assumes relevance. The petitioner having failed to abide by the above conditions, contention regarding violation of the principles of natural justice on the premise that the first respondent’s argument was heard separately can only be rejected. 5. Although the challenge in the above grounds are found to be unsustainable, there is merit in the contention that, as per Section 64VB of the Insurance Act, a policy can be renewed only on the premium being remitted. In the case at hand, the first respondent did not remit the renewal premium. Instead he chose to file Ext.P5 complaint. In the teeth of Section 64VB, the W.P.(C) No.21288 of 2022 -14- Ombudsman could not have directed the petitioner to renew the policy that had expired on 08.12.2018, by accepting the same premium charged earlier. More so, since the renewal was in relation to a new policy that had come into effect from 01.01.2018 onwards. As contended by the Senior Counsel, the Insurance Ombudsman Rules does not provide the Ombudsman with the power to issue such directions. This is discernible from a reading of Rule 17 extracted hereunder; _“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_ W.P.(C) No.21288 of 2022 -15- _compensation exceeding rupees thirty lakhs (including relevant expenses, if any)._ _(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.”_ Thus, as per Rule 17, the power conferred on the Ombudsman is to award compensation and nothing more. The direction in Ext.P8 award to renew the policy at the pre-revised premium rate is hence unsustainable. ## W.P.(C) No.21288 of 2022 -16- In the result, the writ petition is allowed to the limited extent of quashing the directions in Ext.P8 award, while sustaining the findings therein. The second respondent is directed to issue fresh directions in terms of Rule 17 of the Insurance Ombudsman Rules. Sd/- **V.G.ARUN** **JUDGE** Scl/ W.P.(C) No.21288 of 2022 -17- ## **APPENDIX OF WP(C) 21288/2022** |PETITIONER EXHIBITS|| |---|---| |Exhibit P1|TRUE COPY OF THE LETTER DATED 30.11.18 BY| ||FIRST RESPONDENT TO THE PETITIONER.| |Exhibit P2|TRUE COPY OF THE LETTER DATED 4.12.18| ||ISSUED BY THE PETITIONER.| |Exhibit P3|TRUE COPY OF THE LETTER DATED 3.1.2019.| |Exhibit P4|TRUE COPY OF THE EMAIL LETTER DATED| ||4.1.2019 ISSUED TO THE 1ST RESPONDENT BY| ||THE PETITIONER.| |Exhibit P5|TRUE COPY OF THE COMPLAINT DATED 10.1.2019| ||FILED BY THE FIRST RESPONDENT BEFORE THE| ||2ND RESPONDENT INSURANCE OMBUDSMAN.| |Exhibit P6|TRUE COPY OF THE AWARD DATED 23.9.19 BY| ||2ND RESPONDENT.| |Exhibit P7|TRUE COPY OF THE JUDGEMENT IN W.P.(C)| ||NO.29027/19.| |Exhibit P8|TRUE COPY OF THE ORDER OF THE INSURANCE| ||OMBUDSMAN DATED 30.5.2022.| |Exhibit P9|TRUE COPY OF THE PROSPECTUS IN RESPECT OF| ||THE POLICY ISSUED TO THE FIRST RESPONDENT.| |Exhibit P10|TRUE COPY OF THE PROSPECTUS IN RESPECT OF| ||PNB-ORIENTAL ROYAL MEDI CLAIM POLICY 2017.| |RESPONDENT EXHIBITS|| |Exhibit R1 A|TRUE COPY OF THE LETTER DATED 4.11.2018 OF| ||THE BRANCH MANAGER ADDRESSED TO THE IST| ||RESPONDENT| |Exhibit R1 B|TRUE COPY OF THE COMPLAINT DATED 2.1.2019| ||OF THE IST RESPONDENT BEFORE THE| ||GRIEVANCES REDRESSAL FORUM OF THE| ||PETITIONER COMPANY| |Exhibit R1 C|TRUE COPY OF THE ARGUMENT NOTES DATED| ||29.11.2020 SENT BY THE IST RESPONDENT TO| ||THE 2ND RESPONDENT BY SPEED POST WITH| ||COPIES ANNEXURES 1 TO 4| |Exhibit R1 C|TRUE COPY OF THE FORWARDING LETTER DATED| ||29.11.2021 THE IST RESPONDENT TO THE 2ND| ||RESPONDENT BY SPEED POST|