Srinagar- The High Court of J&K and Ladakh has temporarily directed IFFCO TOKIO General Insurance Company Limited to continue with the existing arrangement as regards Ayushman BharatPradhan Mantri Jan Arogya Yojana-SEHAT to allow J&K government to provide free of cost Universal Health Coverage to all its residents, including the serving and retired employees and their families.
“….petitioner (Union Territory of J&K) 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,” a bench of Justice Rajesh Sekhri said while allowing a petition by the government stating therein that the insurance contract between the parties (Government through State Health Agency and IFFCO TOKIO General Insurance Company Limited), is for a period of three years and the 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.”
“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,” the court said, adding, “Hence, present petition is allowed and respondent (Insurance Company) 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.”
The government contended that since the law with respect to insurance is part and parcel of a welfare legislation, “arbitrary” exit notice served by the insurance company was not only against the contractual liabilities, but also against the public health and safety at large.
As noted by the court, the Government of Jammu and Kashmir launched Ayushman BharatPradhan 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 BharatPradhan 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 court noted. 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, through State Health Agency (SHA) by issuing the tender document and the IFFCO TOKIO General Insurance Company Limited emerged the successful bidder. Consequently, a contract, for maximum period of three years, came to be executed between the parties on 10 March 2022. Since the beneficiary families are to be provided the Health Coverage through a network of EHCPs, the court noted, a separate Tripartite Agreement also came to be executed between the parties and EHCPs in terms of clause 6 of the contract.
As per the government, contract between the parties is to subsist till 14th of March, 2025, but the Insurance Company 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 communication, the Chief Executive Officer, SHA, vide communication dated 03.11.2023 requested the company to continue as per the MOU signed between the parties. However, the 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 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 Government through CEO, SHA vide letter dated 28.12.2023 requested Vice President of the Company to adhere to the terms and conditions of the contract in letter and spirit, however, it was conveyed by General Manager of the 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 company, for reference of dispute to the Arbitral Tribunal with a request to nominate an Arbitrator on its behalf.
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