The Madras High Court has held that a writ petition is maintainable against any private body if it has a public duty imposed on it.
Justice Pushpa Sathyanarayana allowed a writ petition filed by a lady seeking a direction to a private insurance company to honour an insurance claim in respect of Health Insurance Policy availed by her husband. The insurance company had repudiated the claim on the ground that the cause of death of her husband was not covered under ‘Major Medical Illness’.
Complaints lodged before grievance cell and Insurance ombudsman also got dismissed. The insurance company argued before the High Court that it is not a “State” within the meaning of Article 12 of the Constitution and hence, by merely impleading the Insurance Regulatory and Development Authority as a party, the writ petition seeking Mandamus against the company is not maintainable in law.
Rejecting this plea, the bench said, “Today, in the modern world, there are numerous socioeconomic activities to be performed by the State. This resulted in sharing some of the obligations to the other bodies, while retaining certain level of control over them. This gave an impetus to the public and private bodies to acquire major concerns and started exercising monopoly power over its activities, which are close to State. By allowing these governmental functions to the private bodies, the fundamental rights of the citizens are being strained.”
The bench further observed that in insurance sector, public monopoly power is replaced by private monopoly power and thus it is necessary that the private bodies should be made accountable to judiciary within the judicial review. It said,”A reading of Article 226 makes it clear that it can be invoked not only for infringement of fundamental rights, but also for any other purpose. Therefore, as stated above, the question that requires determination is whether the private bodies performing public duties can be brought within the purview of judicial review. If a private body is brought within the purview of Article 12, then it will be subject to constitutional limitations. As happened in this case, lack of effective control has made the private bodies acquire more power similar to public authorities. The public monopoly power is replaced by private monopoly power. Hence, it becomes necessary that the private bodies should be made accountable to judiciary within the judicial review. If any private body has a public duty imposed on it, the Court has jurisdiction to entertain the writ petition”
The court further emphasized the malpractice by some insurance company and said that it must be restrained. The court said, “Even though law seems to be clear in constituting a balance between the insuring party and insured, in reality, there is no equality between the two as insurer is the richest corporation and the individual is an ordinary individual. In fact, in many cases, the individual has no legal knowledge about the ambiguous language used in the company’s policy with an intention to waive them from the liability to pay the injured on happening of an agreed event. Many a times the companies willfully neglect reimbursing the insured, who instead of getting their amount from the company have to pay the Courts for getting their rights enforced. The case on hand is the classic example of the same… In India, there should be more transparency and accuracy of the facts before the contract comes into force. This reduces chances of confusion later, when the claim is made under the insurance policy. The malpractice and arbitrary use of power by the insurance companies must be restrained by incorporating provisions to reduce the chances of ambiguity at a later date. Or else, the insurer would continue to take advantage of the insured by falsely repudiating the claims made by the insured.”
