Srinagar- The High Court of J&K and Ladakh has dismissed a petition by the government, seeking its direction to temporarily restrain an insurance company from opting out of the contract for implementation of Ayushman Bharat- Pradhan Mantri Jan Arogya Yojana and Ayushman Bharat–Pradhan Mantri Jan Arogya Yojana SEHAT beyond 14 March this year in J&K.
In its plea, the government had sought the directions to the insurance company— IFFCO-TOKIO, General Insurance Company Limited—to undertake its contractual liability in the interest of patient care.
Otherwise, it said, at this stage it would have serious consequences for the people as approximately 1200-1500 procedures take place daily in Jammu and Kashmir. It said the general public heavily relies on these schemes for adequate treatment, leading to improved and well organized patient care.
As observed by the court’s single bench of Justice Wasim Sadiq Nargal, the contract between government and the Insurance Company was executed for a maximum period of three years, commencing from 10 March 2022. However, the court said, IFFCO – TOKIO, General Insurance Company in their letter dated 1st November last year informed that they would like to serve a notice expressing that they are not interested in further renewing the contract after the expiry of the present policy, which ends on 14 March 2024 as per Clause 9.1c of the contract agreement.
In response, the Chief Executive Officer, State Health Agency, J&K (CEO, SHA, J&K), vide communication dated 3rd November, 2023 addressed to the CEO/MD of the Company, requested them to continue as insurer in terms of the Memorandum of Understanding (MOU) signed between the parties.
In response, the General Manager of the Company informed the CEO vide communication on 16th November, 2023 that they have decided not to accord their consent for the renewal of the contract beyond 14th March, 2024.
Subsequently, the court observed, there were multiple correspondence exchanges between the SHA and the Company, whereby, the SHA requested the company to honour the terms and conditions of the contract. The Company replied stating that they are merely invoking clause 9.1 (c) of the contract agreement and in no way are in breach of the terms of the contract.
The SHA, J&K, then invoked clause 41.3 of the contract agreement vide communication on 19 January this year and served notice to the Company for referring the matter to the Arbitral Tribunal, requesting them to nominate an Arbitrator on their behalf.
Both parities among others had agreed that The Board of arbitrators shall consist of 3 arbitrators, with each Party appointing one arbitrator and the third arbitrator being appointed by the two arbitrators so appointed.
“If the parties cannot agree on the appointment of the Arbitrator within a period of one month from the notification by one party to the other of existence of such dispute, then the Arbitrator shall be appointed by the High Court of Jammu & Kashmir.”
Feeling aggrieved of the same, the government has filed the present petition under Section 9 of the Arbitration and Conciliation Act 1996, seeking interim protection from this Court.
The law is settled that by way of a Section 9 petition under the Act, a party cannot seek specific performance of the contract, the court. Since the insurance contract stands terminated, the court said it cannot intervene under Section 9 of the Arbitration and Conciliation Act to direct specific performance of the contract.
“The law is well settled that whether the termination/exit notice met the requirement of the contract or not and thus, whether the termination/exit was valid or not, would be questions which are required to be examined and adjudicated upon by the Arbitrator,” the court said while rejecting government’s petition under Section 9 of the Arbitration and Conciliation Act, 1996 seeking interim relief.
However, the Court made it clear that its observations are only a prima facie evaluation undertaken for the purpose of passing the order under Section 9 of the Act.
“The Arbitral Tribunal which is yet to be constituted shall not be bound by any of the observations made in this order,” the court said, adding, “The Arbitral Tribunal shall deal with the issues raised before it, even if they are the same as raised before this Court, independently, without, being influenced by any of observation made in this order or the findings recorded by this Court, prima facie.”
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