New Born Baby Includes Pre-Mature Baby: Bombay High Court Grants Relief To Mother Who Was Denied Insurance Claim

While granting relief to a mother who had approached the court after the insurance company refused to clear her claim a division bench of the Bombay High Court comprising Justice GS Patel and Justice Neela Gokhale has recently held that a newborn baby includes a premature baby.

The division bench while granting relief to the mother said that the company could not be allowed to play fast and loose with the faith of the insured.

“The Respondent No. 1 cannot be permitted to play fast and loose with the faith reposed by the insured, and that too, supported by regular renewals and payments of premium, by attempting to interpret clauses in its policies, contrary to their true spirit and only with a view to avoid honouring claims,” Court said.

Additionally, the bench also imposed a litigation cost on the New India Insurance Company for not following the directives of the regulatory authority.

The case pertains to a claim which was made by the mother who had delivered twins after 30 weeks of gestation period. Since the babies were premature they had to be shifted to the Natal Intensive Care Unit. After getting discharged from the hospital the petitioner made a claim of Rs. 11 lakhs for both children.

The New India Insurance Company rejected the claim of the petitioner on the grounds that any 'expenses incurred towards postnatal care, pre-term or pre-mature care or any such expense incurred in connection with the delivery of such New Born Baby would not be covered and that the Congenital Eternal Anomaly of the New Born Baby was also not covered under the policy.

Advocate Ashok Shetty for the mother argued that any clause in a mediclaim policy has to withstand the test of reasonableness, fairness, non-arbitrariness, and non-discrimination. It is a contract of the utmost good faith, a contract uberrimae fidei.

He further informed the court that the clause relied on by the company was not there when the policy had started but was added subsequently and the mother was not informed about the same. He also relied on the IRDA guideline which defined ‘New Born Baby’ to mean a baby born during the policy period and up to 90 days in age.

Advocate DS Joshi for the New India Insurance Company argued that mediclaim policy is purely contractual in nature and the company, though a public sector insurance company cannot be regarded as ‘State’ within the meaning of Article 12 of the Constitution of India since the dispute does not relate to the statutory or governmental function carried out by the company.

Joshi further submitted that no claim was admissible for post-natal care and as per the policy terms and conditions, pre and post-natal expenses are not payable. She canvassed that the terms of the insurance policy are required to be read as it is without any addition or subtraction from them.

The court agreed with the contentions of the mother and stated in its order that the petitioner did not even have the time to revel in the birth of her babies when she faced the rude shock of rejection of her legitimate claim. The court held,

“Lastly, we must note that it has taken the Petitioner, a young mother and a professional, considerable trials and tribulations and the roller coaster litigation process to bring the matter to its logical conclusion. The aim of reposing faith in the insurance company, is pre-eminently to guard/provide against dangers which beset human life and dealings, by agreeing to pay the consideration in the form of premiums, as per the terms of the policy. The Petitioner mother had not even had the time to revel in the birth of her twin babies and nurse them to health, when she faced the rude shock of rejection of her legitimate claim/s by the Insurance company. The Insurance Company, on the other hand appears to have stuck to its dogged determination in refusing to honour the claim and even refusing to act in aid of the directions issued by its own Regulating authority."

Case Title: Rita Kirit Joshi vs New India Insurance Company & Ors