Page 48 - Insurance Times July 2019

form, an assured is under a solemn obligation to make a level of control over them. This gave an impetus to the
true and full disclosure of the information on the subject public and private bodies to acquire major concerns and
which is within his knowledge. The obligation to disclose started exercising monopoly power over its activities, which
extends only to facts which are known to the applicant and are close to State. By allowing these governmental func-
not to what he ought to have known. The obligation to tions to the private bodies, the fundamental rights of the
disclose necessarily depends upon the knowledge one pos- citizens are being strained."
sesses."
The bench further observed that in insurance sector, pub-
Willful non-disclosure is also a fraud, the Court said. "More- lic monopoly power is replaced by private monopoly power
over, non-disclosure of any health event is specifically set and thus it is necessary that the private bodies should be
out as a ground for excluding the liability of the insurer. The made accountable to judiciary within the judicial review.
terms of the policy envisage, "xii. Fraud If any of the In- It said,"A reading of Article 226 makes it clear that it can
sured or the Claimant shall make or advance any claim be invoked not only for infringement of fundamental rights,
knowing the same to be false or fraudulent as regards but also for any other purpose. Therefore, as stated above,
amount or otherwise, this Policy shall immediately become the question that requires determination is whether the
void and all claims or payments in respect of all the insured private bodies performing public duties can be brought
under this Policy shall be forfeited. Non-disclosure of any within the purview of judicial review. If a private body is
health event or ailment/condition/sickness/surgery which brought within the purview of Article 12, then it will be
occurred prior to the taking of this Policy, whether such subject to constitutional limitations. As happened in this
condition is relevant or not to the ailment/disease/surgery case, lack of effective control has made the private bodies
for which the Insured is admitted/treated, shall also con- acquire more power similar to public authorities. The public
stitute Fraud." monopoly power is replaced by private monopoly power.
Hence, it becomes necessary that the private bodies should
Writ petition maintainable against pri- be made accountable to judiciary within the judicial review.
If any private body has a public duty imposed on it, the
vate body when it has a public duty im-
Court has jurisdiction to entertain the writ petition"
posed on it: Madras HC
The court further emphasized the malpractice by some
The Madras High Court has held that a writ petition is
insurance company and said that it must be restrained. The
maintainable against any private body if it has a public duty court said, "Even though law seems to be clear in consti-
imposed on it. tuting a balance between the insuring party and insured,
Justice Pushpa Sathyanarayana allowed a writ petition filed in reality, there is no equality between the two as insurer
by a lady seeking a direction to a private insurance com- is the richest corporation and the individual is an ordinary
pany to honour an insurance claim in respect of Health individual. In fact, in many cases, the individual has no le-
Insurance Policy availed by her husband. The insurance gal knowledge about the ambiguous language used in the
company had repudiated the claim on the ground that the company's policy with an intention to waive them from the
liability to pay the injured on happening of an agreed event.
cause of death of her husband was not covered under
Many a times the companies willfully neglect reimbursing
'Major Medical Illness'.
the insured, who instead of getting their amount from the
Complaints lodged before grievance cell and Insurance
company have to pay the Courts for getting their rights
ombudsman also got dismissed. The insurance company
enforced. The case on hand is the classic example of the
argued before the High Court that it is not a "State" within
same... In India, there should be more transparency and
the meaning of Article 12 of the Constitution and hence,
accuracy of the facts before the contract comes into force.
by merely impleading the Insurance Regulatory and Devel-
This reduces chances of confusion later, when the claim is
opment Authority as a party, the writ petition seeking
made under the insurance policy. The malpractice and ar-
Mandamus against the company is not maintainable in law.
bitrary use of power by the insurance companies must be
Rejecting this plea, the bench said, "Today, in the modern restrained by incorporating provisions to reduce the
world, there are numerous socioeconomic activities to be chances of ambiguity at a later date. Or else, the insurer
performed by the State. This resulted in sharing some of would continue to take advantage of the insured by falsely
the obligations to the other bodies, while retaining certain repudiating the claims made by the insured."

48 The Insurance Times, July 2019