Writ Petition Maintainable If Insurer Disallows Claim De Hors Specific Policy Terms: Delhi High Court

Observing that the court could exercise jurisdiction under Article 226 of the Constitution to enforce a life insurance claim, Justice Purushaindra Kumar Kaurav said,

“The determination of the question depends on consideration of several factors i.e., whether a writ petitioner is merely attempting to enforce his/her contractual rights or the case raises important questions of law and constitutional issues, the nature of the dispute raised, the nature of inquiry necessary for determination of the dispute etc.”

The petitioners in the case, a married couple, had availed a policy named Reliance Travel Care Policy-Corporate Short Term and made flight bookings for travel from Delhi to Italy. Keeping in mind rising cases of Covid-19 and Govt. of India’s Advisory dated February 26, 2020 (which advised citizens to refrain from non-essential travel to Italy), the same were cancelled by them.

When the petitioners filed a claim for insurance, the Insurance Company rejected it, stating that Covid-19 was not covered under the policy. Aggrieved, the petitioners filed a complaint before the Insurance Ombudsman, but the same was also rejected.

Before the court, the petitioners’ counsel argued that the Ombudsman’s and Insurance Company’s decisions were based on misreading of Clause 7 of the insurance policy. He contended that the travel plan was not cancelled due to any Government Regulation or Prohibition.

Notably, Clause 7 of the insurance policy stated that if trip was cancelled on account of any Government Regulation or Prohibition, insured would not be entitled to claim.

Insurance Company’s counsel challenged maintainability of the petition by submitting that High Court could not adjudicate terms of policies under Article 226. She also submitted that no interference was warranted as it was the admitted case of petitioners that they had cancelled their trip owing to Government Advisory/Instructions.

IRDAI’s counsel asserted that Ombudsman’s award was binding on insurer or insurance broker, but not petitioners, and therefore, they may avail alternate remedy available under Consumer Protection Act, 2019.

At the outset, the court observed that besides the subject Advisory, there was no other Government Regulation or Prohibition issued by Govt. of India at the time.

Interpreting the Advisory, it was said that the directions issued were only advisory in nature in view of the evolving situation.

“…if the petitioners, owing to the Advisory and on due application of their mind, decided not to travel to Italy, the same cannot mean that the petitioners were prohibited by the Government of India from travelling to Italy”.

Justice Kaurav undertook strict interpretation of the words ‘Regulation’ or ‘Prohibition’ and opined that the subject Advisory could not mean Prohibition for Indian citizens to travel to Italy.

“The word ‘Advisory’, as per Cambridge Advanced Learner’s dictionary, signifies 'an official announcement that contains advice, information, or a warning'…Therefore, as the word ‘Advisory’ in its plain and simple meaning would mean advice or suggestion, this court would interpret the word in its ordinary and popular sense. Hence, the word ‘Advisory’ would simply mean advice and does not construe to mean prohibition or regulation.”

On the issue of maintainability, it was remarked that no disputed questions of facts were involved in the case. Instead, what had to be considered was the import of the policy’s relevant clauses.

Being of the view that the Insurance Ombudsman and Insurance Company had completely misinterpreted the specific terms of the policy, and committed grave error of law, the court set aside their orders and directed honoring of the petitioners’ claims alongwith 6 percent interest from the date claim became due.

Advocate Prateek Kumar appeared for petitioners

None appeared for respondent No.1/Insurance Ombudsman

Advocates Prerna Mehta and Rajeev M. Roy appeared for respondent No.2/Insurance Company

Advocates Abhishek Nanda and Parul Tomer appeared for respondent No.3/IRDAI

Case Title: Mohit Kumar and Anr. v. Office of the Insurance Ombudsman and Ors., W.P.(C) 8916/2020

Citation: 2023 LiveLaw (Del) 1173