Ayushman Bharat case: DB stays contempt proceedings against Insurance Company

13/09/2024

JAMMU, Sep 12: A Division Bench of Jammu & Kashmir and Ladakh High Court comprising Justice Sanjeev Kumar and Justice Sindhu Sharma stayed the contempt proceedings against Iffco Tokio General Insurance Company.
DB also directed UT of Jammu and Kashmir is directed to utilize the premium amount of Rs.427.73 crores lying with it for reimbursement of medical claims to the Empanelled Health Care Providers (EHCPs) under Ayushman BharatPradhan Mantri Jan Arogya Yojana (AB-PMJAY) SEHAT scheme in Jammu and Kashmir, which, however, shall be subject to outcome of the present appeal.
This order has been passed in an appeal filed by the insurance company has challenged the judgment on various grounds including the one that the Single bench was not a duly constituted Commercial Division Court under the provisions of Section 4 of the Commercial Courts Act and hence did not have jurisdiction to entertain, adjudicate and consequently decide the issue.
The J&K government launched Ayushman BharatPradhan Mantri Jan Arogya Yojana 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 the same benefits that were available under the AB PM-JAY SEHAT scheme, a Government of India Scheme, that provides annual health insurance cover of Rs 5 lakh 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 of reducing catastrophic health expenditure and improving access to quality healthcare to the domiciles of J&K.
It is worthwhile to mention here that Writ Court directed IFFCO TOKIO General Insurance Company to continue with the existing arrangement to provide free of cost Universal Health Coverage to all the residents of J&K including the serving and retired employees and their families under the AB-PMJAY SEHAT Scheme.
It is also mention here that a three-year contract was awarded to IFFCO Tokio. In keeping with the contract, which commenced on March 15, 2022, and was to continue until March 14, 2025, the company had to provide health insurance coverage under the AB PM-JAY SEHAT scheme.
The IFFCO TOKIO General Insurance Company had terminated the contract with effect from March 14, 2024. In the termination notice, the company had stated that though the insurance contract was for 3 years, however, as per clause 9.1 (c) of the contract, the company had the right to terminate the contract even before the completion of the period of three years.
On this aspect, the court did not agree and held that the insurance contract was for a minimum period of three years and the insurer had no right to terminate the contract before the expiry of that period. In response to a plea by the State Health Agency (SHA) that sought the court's intervention, in August this year, the single bench in its decision ruled that IFFCO Tokio must continue fulfilling its contractual responsibilities until the dispute is resolved through arbitration.

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