HC directs Insurance Agency to continue with insurance of citizen under Ayushman Bharat

STATE TIMES NEWS

JAMMU: A Big Relief to Jammu & Kashmir Govt in Ayushman Bharat, Justice Rajesh Sekhri of Jammu & Kashmir and Ladakh High Court directed IFFCO TOKIO General Insurance Company continue with the existing arrangement as per terms and conditions of the contract agreement pending resolution of dispute by the Arbitrator.
As factual narration of the present case would unfurl, the Government of Jammu and Kashmir has launched Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana-SEHAT [“AB-PMJAY-SEHAT”] to provide free of cost Universal Health Coverage to all its residents, including the serving and retired employees and their families. The Scheme is intended to provide same benefits those were available under Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana [“AB-PMJAY”], a Government of India Scheme, that is providing annual health insurance cover of Rs.5.00 lacs per family on a floater and cashless basis through an established network of health care providers. Pertinently, the Scheme came to be introduced by the Government with the object to reduce catastrophic health expenditure and to improve access to quality health care of the domiciles of UT. The eligible beneficiary families, under this Scheme are to be provided the Health Coverage through a network of Empanelled Health Care Providers (EHCPs). The Government decided to implement the Scheme to provide Health insurance to defined categories of families eligible in the UT of Jammu and Kashmir. As a result, bidding process was commenced by the Government, through State Health Agency (SHA) by issuing the tender document and the respondent-company emerged the successful bidder. Consequently, a contract, for maximum period of three years, came to be executed between the parties on 10.03.2022. Since the beneficiary families are to be provided the Health Coverage through a network of EHCPs, a separate Tripartite Agreement also came to be executed between the parties and EHCPs in terms of clause 6 of the contract.
The case set out by the petitioner is that contract between the parties is to subsist till 14th of March, 2025, but the respondent vide its letter dated 01.11.2023, served a notice that it was not interested in further renewal of the contract after the expiry of the policy period ending 14.03.2024. In response to the aforesaid communication of the respondent, the Chief Executive Officer, SHA, vide communication dated 03.11.2023 requested the respondent to continue as per the MOU signed between the parties. However, the respondent-Insurance company vide communication dated 16.11.2023 reiterated that it has decided not to accord consent for renewal of the contract beyond 14th of March, 2024 and will not issue any new policy cover beyond the existing policy cover period and requested that SHA had enough time to make arrangement so that beneficiaries may not suffer. The CEO, SHA vide communication dated 07.12.2023 again requested Vice-President of the respondent-company to re-consider its decision, however, the respondent vide communication dated 13.12.2023 informed the CEO that it stand by its decision not to continue. Again the petitioner through CEO, SHA vide letter dated 28.12.2023 requested Vice President of the respondent-Company to adhere to the terms and conditions of the contract in letter and spirit, however, it was conveyed by General Manager of the respondent-Company, vide its communication dated 03.01.2024 that Company is only invoking clause 9.1(c) of the Insurance contract. Ultimately, the SHA, by invocation of clause 41.3 of the contract, vide communication No. SHA/ABPM-JAY/2023-24/5334 dated 19.01.2024 served a notice upon the respondent, for reference of dispute to the Arbitral Tribunal with a request to nominate an Arbitrator on its behalf.
According to the petitioner, the insurance contract between the parties, is for a period of three years and the respondent-Company having already extended the insurance cover for the second year, in terms of clause 9 of the contract, cannot turn around and wriggle out of the contract for the third year extension and plunge the people of UT into risk and uncertainty. It is contention of the petitioner that since the law with respect to insurance is part and parcel of welfare legislation, arbitrary exit notice served by the respondent, is not only against the contractual liabilities, but also against the public health and safety at large. Respondents be directed to restrain from opting out of the Contract of Insurance duly executed on 10.03.2022 between the Petitioner and respondent herein for implementation of Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana and Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana-SEHAT in the Union Territory of J&K beyond 14.03.2024; and/or Respondents be directed to continue the contract upto 14.03.2025 in the interest of patient care and public at large: and Pass order in favour of the petitioner and against the respondent, thereby directing the respondent to undertake its contractual liability and in the interest of patient care, which otherwise at this stage would have serious consequences for the people of the U.T. of J&K as approximately 1200-1500 procedures take place daily in the Union Territory of Jammu and Kashmir and the general public heavily relies on these schemes for adequate treatment, leading to improved and well-organized patient care. Justice Rajesh Sekhri after hearing Sr. Adv PN Raina with Advocate JA Hamal, AAG Amit Gupta for the UT, observed that on overall conspectus of the case, what comes to the fore is that contract between the parties is not in its nature determinable but hedged upon the occurrence of exigencies and eventualities enumerated therein. Therefore, Specific Relief Act is not applicable to the present case. Functions of all Insurance Companies, public and private, are regulated under the Insurance Act and the Regulations framed thereunder. Therefore, an insurance contract is subservient to the statutory provisions of the Insurance Act and must be interpreted and construed having regard to larger public policy and public interest, particularly, when it intends to provide service of health care to the citizens. Justice Rajesh Sekhri further observed that petitioner has succeeded to make out a prima facie case for grant of interim measures in terms of Section 9 of the Arbitration Act and since contract between the parties is service of insurance, balance of convenience favours the grant of injunction. The damages, which may be suffered by the State Health Agency, in general, and the beneficiaries of the Scheme, in particular, on account of alleged breach of contract by the insurer, may not be compensated at a future point of time in terms of money or otherwise. Hence, present petition is allowed and respondent is temporarily directed to continue with the existing arrangement as per terms and conditions of the contract agreement pending resolution of dispute by the Arbitrator.