‘Newborn’ Baby Includes ‘Pre-Mature Baby’: Bombay High Court Directs Insurer To Pay For Expenses Related To Infant’s Care, Imposes ₹5 Lakh Cost

A division bench of Justices Gautam Patel and Neela Gokhale accordingly directed New India Assurance to pay Rs. 11 lakh along with interest for medical expenses incurred by a mother after the birth of her pre-mature twins who suffered from congenital anomalies.

It rejected the insurance policy clause which stated that “expenses relating to illness or injury to the new-born” did not include “expenses relating to postnatal care, pre-term or premature care.” “It is distinction without a difference,” the bench said.

“The Respondent No. 1 (Insurance Company) cannot be permitted to play fast and loose with the faith reposed by the insured, and that too, supported by regular renewals and payments of premium, by attempting to interpret clauses in its policies, contrary to their true spirit and only with a view to avoid honouring claims,” the bench said while imposing an additional litigation cost of Rs. 5 lakh on the company.

Facts

Petitioner Rita Joshi, a young mother and lawyer approached the court in a petition under Article 226 of the constitution. She had two polices of New India Assurance Company of Rs. 20 lakh which she renewed regularly. In September 2018, she delivered two pre-mature twins at 30 weeks in an emergency surgery and incurred heavy costs after they were admitted to the NICU.

Clause 3.11 to the policy covering “a new born baby for any Illness or Injury” was introduced the same year. However, the petitioner’s claim was rejected on the ground that “expenses incurred towards post-natal care, pre-term or pre-mature care or any expense incurred in connection with delivery of a new born baby wouldn’t be covered.” Moreover, defects at birth or Congenital External Anomaly was also not covered under the policy.

Advocate Ashok Shetty for the mother contended that any clause in the medical must withstand the test of reasonableness, fairness, non-arbitrariness and non-discrimination. It is a contract of the utmost good faith. He claimed the exclusion wasn’t there when the policy was purchased. Moreover, clause 3.11 was hit by unreasonableness. He also relied on Insurance Regulatory and Development Authority  (IRDA) guidelines asking insurers not to have restrictive clauses in policies that cover new born babies.

The insurer raised issues regarding the maintainability of the plea. The advocate submitted that the clause was clear the pre and post-natal expenses were not covered. It was submitted that complications in the baby were due to the pre-mature birth and also tendered a legal experts opinion supporting their case. Moreover, all policy holders were informed about revision of the policy in 2017.

The judgement authored by Justice Gokhale held the petition was maintainable as it involved interpretation of the policy clause. She held that new-born was not defied under the policy.

However, the insurers approach to distinguish between a new born and pre-mature baby was unreasonable, unjust and contrary to the fundamental ‘good faith ethic’ of an insurance policy. These submissions are the sheerest casuistry. They cannot be allowed to succeed.

"The further distinction between a 'newborn' and a 'premature baby' or a baby born 'pre-term' is also baseless as a newborn baby can be one born 'full term' or 'pre-term'. A full-term baby does not become more 'newer' any more than a 'pre-term' baby becomes an 'earlier born' or, to make it even more pointed, 'old born" Justice Gokhale wrote for the bench.

Justice Gokhale also held that “injury” and “illness” were not exhaustive words and injury could occur on account of a baby being born pre-mature. The court rejected the distinction made between expenses of a new born baby as being difference from post-natal care or expenses for pre-mature babies. It also held the IRDA guidelines against the insurance company.

Lastly, the bench said that it had taken the, a young mother and a professional, considerable trials and tribulations and the roller coaster litigation process to bring the matter to its logical conclusion.

The faith reposed in the insurance company was primary so that it could pay consideration against “dangers which beset human life and dealings.”

“But in the present case the mother had not even had the time to revel in the birth of her twin babies and nurse them to health, when she faced the rude shock of rejection of her legitimate claim/s by the Insurance company. The Insurance Company, on the other hand appears to have stuck to its dogged determination in refusing to honour the claim and even refusing to act in aid of the directions issued by its own Regulating authority,” the bench observed.

Case Title: Rita Kirit Joshi v. New India Assurance

Citation: 2023 LiveLaw (Bom) 132