Writ Petitions are maintainable if insurer disallows claim de hors specific policy terms

In the matter of Mohit Kumar and Anr. v. Office of the Insurance Ombudsman and Ors., W.P.(C) 8916/2020 decided on 07.11.2023 by the Hon’ble Delhi High Court

FACTS: The Petitioners in the case are a married couple who 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 infection and Govt. of India’s Advisory dated February 26, the said bookings were cancelled by them. The petitioners filed a claim for insurance which was rejected by the insurance company stating that Covid-19 cancellations were not covered under the policy. Aggrieved, the petitioners filed a complaint under Rule 13(1)(b) of the Insurance Ombudsman Rule, 2017 before the Insurance Ombudsman, but the same was also rejected.

Before the Hon’ble Delhi High Court, the Petitioners’ counsel argued that the Ombudsman’s and Insurance Company’s decisions were based on misreading of Clause 7 of the of the Insurance Policy. It was also 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. It was 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.

OBSERVATIONS: On the aspect of maintainability the Hon’ble High Court relying upon the judgment of the Hon’ble Apex Court in Life Insurance Corporation of India and Ors. v. Asha Goel and Anr [(2001) 2 SCC 160] held that there was no disputed question of facts and what was to be considered was the import and extent of the relevant clauses of the insurance policy hence, the present petition was maintainable.

The High Court further reiterated law laid down by the Hon’ble Supreme Court that the Constitution does not place any fetter on exercise of the extraordinary jurisdiction. Rather, it is left to the discretion of the High Courts. Therefore, it cannot be laid down as a general proposition of law that in no case the High Court can entertain a writ petition under Article 226 of the Constitution to enforce a claim under an insurance policy. 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.

Adverting to the facts of the present case, the Hon’ble High Court undertook strict interpretation of the words ‘Regulation’ or ‘Prohibition’ and opined that the subject Advisory could have meant prohibition for Indian citizens to travel to Italy. The interpretation of the Hon’ble Court has been reiterated hereinbelow:

“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.”

The Hon’ble Court observed that besides the subject Advisory there was no other Government Regulation or Prohibition issued by Govt. of India at the time. 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 the orders and directed honoring of the petitioners’ claim alongwith 6 percent interest from the date claim became due.