Partly allowed

M/S Toyota Kirloskar Motor Pvt. Ltd. v. the Insurance Ombudsman

Karnataka HC4 Jul 2024WP/4160/2019

Case brief

AI extract

What is this about?

This writ petition challenged the absence of an employer in insurance claims adjudication before the Insurance Ombudsman. The Court held that principles of natural justice require the employer to be heard since the outcome affects their civil liability for premium calculations, directing the Ombudsman to notify the employer in pending and future cases.

What did the court decide?

Writ petition allowed in part. Insurance Ombudsman directed to notify the employer before passing an award under Rule 15 of the Rules, 2017 in pending cases and future complaints. Order exempted the O

M/S Toyota Kirloskar Motor Pvt. Ltd. Vs… — Pension and Retirement Benefits | Karnataka HC (2024)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 04^TH DAY OF JULY, 2024

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BEFORE

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THE HON’BLE MR. JUSTICE K. V. ARAVIND

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WRIT PETITION No.4160/2019 (GM-AC)

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BETWEEN:

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M/S. TOYOTA KIRLOSKAR MOTOR PVT. LTD., PLOT No.1, BIDADI INDUSTRIAL AREA, BIDADI, RAMANAGAR DISTRICT-562 109. REPRESENTED BY ITS GENERAL MANAGER, EMPLOYEE RELATIONS, SRI G. SHANKARA.

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...PETITIONER

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(BY SRI SOMASHEKAR, ADVOCATE FOR SRI S. N. MURTHY, ADVOCATE)

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AND:

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THE INSURANCE OMBUDSMAN FOR THE STATE OF KARNATAKA, 19/19, JEEVAN SOUDHA BUILDING, GROUND FLOOR, 24^TH MAIN, J.P. NAGAR 1^ST PHASE, BENGALURU 560 078.

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M/S. UNITED INDIA INSURANCE CO. LTD., DIVISIONAL OFFICE, No.9, 10/4, MITHRA TOWERS, KASTURBA ROAD, BENGALURU 560 001. REP. BY ITS MANAGER.

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MR. CHANDRASHEKAR K.S., AGED ABOUT 40 YEARS, T.M. No.1155, TOYOTA KIRLOSKAR MOTOR PVT. LTD., PLOT No.1, BIDADI INDUSTRIAL AREA, BIDADI, RAMANAGAR DISTRICT 562 109.

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…RESPONDENTS

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(R1 SERVED;

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SRI JANARDHAN REDDY, ADVOCATE FOR R2; SRI K.B. NARAYANA SWAMY, ADVOCATE FOR R3)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT R1 TO ISSUE NOTICE TO THE PETITIONER ON ANY CLAIM PETITION THAT MAY BE FILED BY R3 OR ANY OTHER EMPLOYEE BEFORE R1 AND QUASH THE AWARD DATED 02.01.2019 PASSED BY R1 AT ANNEXURE-F TO THIS WRIT PETITION.

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THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 07.06.2024, THIS DAY THE COURT PRONOUNCED THE FOLLOWING:

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ORDER

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This writ petition seeking the following prayers;

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"a) Writ of mandamus to the first respondent directing the first respondent to issue notice to the petitioner on any claim petition that may be filed by the third respondent or any other employee before the first respondent; and

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b) further issue a writ in the nature of certiorari or any other writ or order and quash the Award

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bearing No.10/BNG/A/G1/0314/2018-19 dated 02.01.2019 passed by the first respondent at Annexure 'F' to this writ petition; and

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c) pass such other appropriate order as deemed fit to grant in the facts and circumstances of the case, in the interest of justice."

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The petitioner is a company engaged in manufacture of motor vehicles. The petitioner has contracted "Group Personal Accident Tailor Made Policy" with respondent No.2United India Insurance Company Limited to cover all the employees of the company when they suffer bodily injuries.

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The benefit is available even in case of death of an employee. It is stated that the policy would cover injuries suffered even beyond working place and hours. The benefit is available even to death cases outside working place.

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The premium is negotiated by the petitioner with the Insurance Company on the basis of the claims made by the employees in the previous year. Depending on the amount of compensation paid by the Insurance Company in the

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previous year, the Insurance Company would calculate, negotiate and fix the premium for the next year.

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The employees directly make a claim with the Insurance Company. The Insurance Company on examination of the reports would determine the compensation to be payable. In the event of any dispute with the compensation determined by the Insurance Company, the employee would file a claim before the Ombudsman under the Insurance Ombudsman Rules, 2017 (hereinafter referred to as 'Rules, 2017'). The Ombudsman after considering the claim made by the employee, documents in support of such claim and the contentions of the Insurance Company would determine the compensation to be payable.

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It is the specific case of the petitioner that, the petitioner is a stakeholder incurring civil liability. The

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petitioner should be provided an opportunity before the Ombudsman.

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Learned Senior counsel Sri. S.N.Murthy appearing on behalf of Sri.Somashekar, learned counsel for the petitioner submits that premium towards insurance policy is contributed by the petitioner. The premium for the next year is determined by the Insurance Company on the basis of the quantum of compensation disbursed in the previous year, the petitioner is necessary party before the Ombudsman. It is submitted that there are instances of incorrect, fake or high compensation being claimed by the employees on the basis of unreliable and unverified documents. In such situation, due to the said wrong claims of the employees, the petitioner is suffering in the form of contributing higher premium. The insurance benefit is provided to the employees for their genuine claims. In view of certain employees making abusive claims, the same can be avoided by providing an opportunity before the

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Ombudsman. The presence of the petitioner before the Ombudsman would be for the welfare of the employees and in the interest of Insurance Company as well and the object and purpose of extending insurance benefit would be achieved.

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Learned Senior counsel appearing for the petitioner submits that though the petitioner has raised contentions with reference to the manner of quantification of the award and the quantum of award itself is in dispute, the same is not being pressed in the present petition.

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Submission is placed on record.

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Respondent No.1 is served and unrepresented.

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Sri Janardhan Reddy, learned counsel for respondent No.2 submits that the presence of employer before respondent No.1-Insurance Ombudsman would not prejudice the rights of any of the parties. In fact, the same

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would assist the Insurance Company in avoiding any fake or incorrect claims.

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Sri K.B.Narayana Swamy, learned counsel for respondent No.3-claimant in the present case would submit that insurance is provided by the petitioner for the welfare of the employees. The employees are bound to make use of the said benefit towards genuine claims. It is submitted that presence of the petitioner before the Insurance Ombudsman would avoid any incorrect or bogus claims as the petitioner would be in a better position to verify the genuineness and correctness of the claims.

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Heard learned counsel for the parties and perused the writ petition papers.

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The petitioner has contracted policy called "Group Personal Accident Tailor Made Policy" with respondent No.2Insurance Company for the benefit of its employees. The narrow dispute in this petition is as to whether the

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petitioner being an employer having made contribution to the policy is required to be heard by respondent No.1Insurance Ombudsman while adjudicating the dispute under Rules 14 and 15 of the Rules, 2017, which reads as under;

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"14. Manner in which complaint to be made. —

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(1) Any person who has a grievance against an insurer, may himself or through his legal heirs, nominee or assignee, make a complaint in writing to the Insurance Ombudsman within whose territorial jurisdiction the branch or office of the insurer complained against or the residential address or place of residence of the complainant is located.

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(2) The complaint shall be in writing, duly signed by the complainant or through his legal heirs, nominee or assignee and shall state clearly the name and address of the complainant, the name of the branch or office of the insurer against whom the complaint is made, the facts giving rise to the complaint, supported by documents, the nature and extent of the loss caused to the complainant and the relief sought from the Insurance Ombudsman.

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(3) No complaint to the Insurance Ombudsman shall lie unless—

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(a) the complainant makes a written representation to the insurer named in the complaint and—

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(i) either the insurer had rejected the complaint; or

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(ii) the complainant had not received any reply within a period of one month after the insurer received his representation; or

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(iii) the complainant is not satisfied with the reply given to him by the insurer;

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(b) The complaint is made within one year—

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(i) after the order of the insurer rejecting the representation is received; or

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(ii) after receipt of decision of the insurer which is not to the satisfaction of the complainant;

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(iii) after expiry of a period of one month from the date of sending the written representation to the insurer if the insurer named fails to furnish reply to the complainant .

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(4) The Ombudsman shall be empowered to condone the delay in such cases as he may consider

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necessary, after calling for objections of the insurer against the proposed condonation and after recording reasons for condoning the delay and in case the delay is condoned, the date of condonation of delay shall be deemed to be the date of filing of the complaint, for further proceedings under these rules.

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(5) No complaint before the Insurance Ombudsman shall be maintainable on the same subject matter on which proceedings are pending before or disposed of by any court or consumer forum or arbitrator.

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15. Insurance Ombudsman to act fairly and equitably. —

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(1) The Ombudsman may, if he deems fit, allow the complainant to adopt a procedure other than under sub-rule (1) or sub-rule (2) of rule 14 for making a complaint, after notifying the parties to the dispute.

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(2) The Ombudsman shall have the power to ask the parties concerned for additional documents in support of their respective contentions and wherever considered necessary, collect factual information relating to the dispute available with the insurer and

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may make available such information to the parties concerned.

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(3) The Ombudsman may obtain the opinion of professional experts, if the disposal of a case warrants it.

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(4) The Ombudsman shall dispose of a complaint after giving the parties to the dispute a reasonable opportunity of being heard."

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Rule 14 provides for complaint by any person against an insurer on the grievance. Sub-Rule (3) of Rule 14 provides for complaint before the Insurance Ombudsman. Rule 15 provides for power of the Insurance Ombudsman.

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Sub-Rule (4) of Rule 15 provides for disposal of a complaint

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after giving the parties to the dispute a reasonable opportunity of being heard.

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On conjoint reading of Rule 14(1) and Rule 15(4), it is clear that the employer who has contributed premium is not provided an opportunity in the proceedings unless the employer has the grievance against the insurer.

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The submission of learned counsel for the petitioner that premium to the subject policy is contributed by the petitioner is not in dispute. It is the case of the petitioner that premium for the year would be negotiated and fixed by the Insurance Company on the basis of the total amount of compensation awarded by the Insurer in the previous year. It is clear that the compensation paid by the Insurance Company to settle claims of the employees of the petitioner will have financial implications on the petitioner/employer in a form of contribution of higher premium. In such circumstances, this Court has to consider the prayer of the petitioner to provide an opportunity of being heard before the Insurance Ombudsman in the absence of specific provision providing such opportunity.

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The Hon'ble Supreme Court in the case of State of

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U.P. v. Sudhir Kumar Singh, (2021) 19 SCC 706, has

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held as follows:

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"42. An analysis of the aforesaid judgments thus reveals:

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42.1. Natural justice is a flexible tool in the hands of the judiciary to reach out in fit cases to remedy injustice. The breach of the audi alteram partem rule cannot by itself, without more, lead to the conclusion that prejudice is thereby caused.

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42.2. Where procedural and/or substantive provisions of law embody the principles of natural justice, their infraction per se does not lead to invalidity of the orders passed. Here again, prejudice must be caused to the litigant, except in the case of a mandatory provision of law which is conceived not only in individual interest, but also in public interest.

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42.3. No prejudice is caused to the person complaining of the breach of natural justice where such person does not dispute the case against him or it. This can happen by reason of estoppel, acquiescence, waiver and by way of non-challenge or non-denial or admission of facts, in cases in which the Court finds on facts that no real prejudice can therefore be said to have been caused to the person complaining of the breach of natural justice.

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42.4. In cases where facts can be stated to be admitted or indisputable, and only one conclusion is possible, the Court does not pass futile orders of setting aside or remand when there is, in fact, no prejudice caused. This conclusion must be drawn by the Court on an appraisal of the facts of a case, and not by the authority who denies natural justice to a person.

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42.5. The “prejudice” exception must be more than a mere apprehension or even a reasonable suspicion of a litigant. It should exist as a matter of fact, or be based upon a definite inference of likelihood of prejudice flowing from the non-observance of natural justice."

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In SBI v. Rajesh Agarwal, (2023) 6 SCC 1,

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"40. ……………. It is now a settled principle of law that the rule of audi alteram partem applies to administrative actions, apart from judicial and quasijudicial functions. [A.K. Kraipak v. Union of India, (1969) 2 SCC 262; St. Anthony's College v. Rev. Fr. Paul Petta, 1988 Supp SCC 676 : 1989 SCC (L&S) 44; Uma Nath Pandey v. State of U.P., (2009) 12 SCC 40 : (2010) 1 SCC (Cri) 501.] It is also a settled position in administrative law that it is mandatory to provide

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for an opportunity of being heard when an administrative action results in civil consequences to a person or entity.

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41. In State of Orissa v. Binapani Dei [State of Orissa v. Binapani Dei, AIR 1967 SC 1269] , a two-Judge Bench of this Court held that every authority which has the power to take punitive or damaging action has a duty to give a reasonable opportunity to be heard. This Court further held that an administrative action which involves civil consequences must be made consistent with the rules of natural justice : (AIR p. 1271, para 9)

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“9. … The rule that a party to whose prejudice an order is intended to be passed is entitled to a hearing applies alike to judicial tribunals and bodies of persons invested with authority to adjudicate upon matters involving civil consequences. It is one of the fundamental rules of our constitutional set-up that every citizen is protected against exercise of arbitrary authority by the State or its officers. Duty to act judicially would therefore arise from the very nature of the function intended to be performed : it need not be shown to be super-added. If there is

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power to decide and determine to the prejudice of a person, duty to act judicially is implicit in the exercise of such power. If the essentials of justice be ignored and an order to the prejudice of a person is made, the order is a nullity. That is a basic concept of the rule of law and importance thereof transcends the significance of a decision in any particular case.”

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42. In Maneka Gandhi v. Union of India [Maneka Gandhi v. Union of India, (1978) 1 SCC 248] , a seven-Judge Bench of this Court held that any person prejudicially affected by a decision of the authority entailing civil consequences must be given an opportunity of being heard. This has been reiterated in a catena of decisions of this Court."

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"45. In Canara Bank v. V.K. Awasthy [Canara Bank v. V.K. Awasthy, (2005) 6 SCC 321 : 2005 SCC (L&S) 833] , a two-Judge Bench of this Court succinctly summarised the history, scope, and application of the principles of natural justice to administrative actions involving civil consequences in the following terms : (SCC pp. 331-32, para 14)

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“14. Concept of natural justice has undergone a great deal of change in recent years. Rules of natural justice are not rules embodied always expressly in a statute or in rules framed thereunder. They may be implied from the nature of the duty to be performed under a statute. What particular rule of natural justice should be implied and what its context should be in a given case must depend to a great extent on the fact and circumstances of that case, the framework of the statute under which the enquiry is held. The old distinction between a judicial act and an administrative act has withered away. Even an administrative order which involves civil consequences must be consistent with the rules of natural justice. The expression “civil consequences” encompasses infraction of not merely property or personal rights but of civil liberties, material deprivations and nonpecuniary damages. In its wide umbrella comes everything that affects a citizen in his civil life.”

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(emphasis supplied)

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46. There is a consistent pattern of judicial thought that civil consequences entail infractions not merely of property or personal rights, but also of civil liberties, material deprivations, and non-pecuniary damages. Every order or proceeding which involves civil consequences or adversely affects a citizen should be in accordance with the principles of natural justice."

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"67. The Master Directions on Frauds do not expressly exclude a right of hearing to the borrowers before action to class their account as frauds is initiated. The principles of natural justice can be read into a statute or a notification where it is silent on granting an opportunity of a hearing to a party whose rights and interests are likely to be affected by the orders that may be passed.

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68. In a decision of a three-Judge Bench of this Court in Swadeshi Cotton Mills v. Union of India [Swadeshi Cotton Mills v. Union of India, (1981) 1 SCC 664] , the issue was whether the Central Government was required to comply with the requirements of audi alteram partem before it took over the management of an industrial undertaking under Section 18AA(1)(a) of the Industries (Development and Regulation) Act, 1951. R.S. Sarkaria, J. speaking for the majority consisting of himself and D.A. Desai, J.

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laid down the following principles of law : (SCC p. 689, para 44)

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“44. In short, the general principle — as distinguished from an absolute rule of uniform application — seems to be that where a statute does not, in terms, exclude this rule of prior hearing but contemplates a post-decisional hearing amounting to a full review of the original order on merits, then such a statute would be construed as excluding the audi alteram partem rule at the pre-decisional stage. Conversely, if the statute conferring the power is silent with regard to the giving of a pre-decisional hearing to the person affected and the administrative decision taken by the authority involves civil consequences of a grave nature, and no full review or appeal on merits against that decision is provided, courts will be extremely reluctant to construe such a statute as excluding the duty of affording even a minimal hearing shorn of all its formal trappings and dilatory features at the pre-decisional stage, unless, viewed

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pragmatically, it would paralyse the administrative progress or frustrate the need for utmost promptitude. In short, this rule of fair play ‘must not be jettisoned save in very exceptional circumstances where compulsive necessity so demands’. The court must make every effort to salvage this cardinal rule to the maximum extent possible, with situational modifications. But, to recall the words of Bhagwati, J., the core of it must, however, remain, namely, that the person affected must have reasonable opportunity of being heard and the hearing must be a genuine hearing and not an empty public relations exercise.”

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(emphasis supplied)

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"70. In Mangilal v. State of M.P. [Mangilal v. State of M.P., (2004) 2 SCC 447 : 2004 SCC (Cri) 1085] , a two-Judge Bench of this Court held that the principles of natural justice need to be observed even if the statute is silent in that regard. In other words, a statutory silence should be taken to imply the need to observe the principles of natural justice where

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substantial rights of parties are affected : (SCC pp. 453-54, para 10)

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“10. Even if a statute is silent and there are no positive words in the Act or the Rules made thereunder, there could be nothing wrong in spelling out the need to hear the parties whose rights and interest are likely to be affected by the orders that may be passed, and making it a requirement to follow a fair procedure before taking a decision, unless the statute provides otherwise. The principles of natural justice must be read into unoccupied interstices of the statute, unless there is a clear mandate to the contrary. No form or procedure should ever be permitted to exclude the presentation of a litigant's defence or stand. Even in the absence of a provision in procedural laws, power inheres in every tribunal/court of a judicial or quasi-judicial character, to adopt modalities necessary to achieve requirements of natural justice and fair play to ensure better and proper discharge of their duties. Procedure is

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mainly grounded on the principles of natural justice irrespective of the extent of its application by express provision in that regard in a given situation. It has always been a cherished principle. Where the statute is silent about the observance of the principles of natural justice, such statutory silence is taken to imply compliance with the principles of natural justice where substantial rights of parties are considerably affected. The application of natural justice becomes presumptive, unless found excluded by express words of statute or necessary intendment. … Its aim is to secure justice or to prevent miscarriage of justice. Principles of natural justice do not supplant the law, but supplement it. These rules operate only in areas not covered by any law validly made. They are a means to an end and not an end in themselves.”

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(emphasis supplied)

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"74. The decision of this Court in Swadeshi Cotton Mills [Swadeshi Cotton Mills v. Union of India, (1981) 1 SCC 664] and K.I. Shephard [K.I. Shephard v. Union

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of India, (1987) 4 SCC 431 : 1987 SCC (L&S) 438] demonstrates that the exigency of a situation is contextual. The Court must lean in favour of reading in the principles of natural justice when faced with a regulatory silence. Any exclusion must be confined to the narrowest possible limits. The application of the requirement of a prior hearing could be excluded only in situations where importing it would have the effect of paralysing the entire process."

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Underlining mine

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In Uma Nath Pandey v. State of U.P., (2009) 12

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SCC 40,

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"3. xxxxxxx

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9. The expressions ‘natural justice’ and ‘legal justice’ do not present a watertight classification. It is the substance of justice which is to be secured by both, and whenever legal justice fails to achieve this solemn purpose, natural justice is called in aid of legal justice. Natural justice relieves legal justice from unnecessary technicality, grammatical pedantry or logical prevarication. It supplies the omissions of a formulated law. As Lord Buckmaster said, no form or procedure should ever be permitted

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to exclude the presentation of a litigant's defence.

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10. The adherence to principles of natural justice as recognised by all civilised States is of supreme importance when a quasi-judicial body embarks on determining disputes between the parties, or any administrative action involving civil consequences is in issue. These principles are well settled. The first and foremost principle is what is commonly known as audi alteram partem rule. It says that no one should be condemned unheard. Notice is the first limb of this principle. It must be precise and unambiguous. It should apprise the party determinatively of the case he has to meet. Time given for the purpose should be adequate so as to enable him to make his representation. In the absence of a notice of the kind and such reasonable opportunity, the order passed becomes wholly vitiated. Thus, it is but essential that a party should be put on notice of the case before any adverse order is passed against him. This is one of the most important principles of

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natural justice. It is after all an approved rule of fair play. …"

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"11. Principles of natural justice are those rules which have been laid down by the courts as being the minimum protection of the rights of the individual against the arbitrary procedure that may be adopted by a judicial, quasi-judicial and administrative authority while making an order affecting those rights. These rules are intended to prevent such authority from doing injustice."

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"14. Concept of natural justice has undergone a great deal of change in recent years. Rules of natural justice are not rules embodied always expressly in a statute or in rules framed thereunder. They may be implied from the nature of the duty to be performed under a statute. What particular rule of natural justice should be implied and what its context should be in a given case must depend to a great extent on the facts and circumstances of that case, the framework of the statute under which the enquiry is held. The old distinction between a judicial act and an administrative act has

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withered away. Even an administrative order which involves civil consequences must be consistent with the rules of natural justice. The expression ‘civil consequences’ encompasses infraction of not merely property or personal rights but of civil liberties, material deprivations and nonpecuniary damages. In its wide umbrella comes everything that affects a citizen in his civil life."

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In Dharampal Satyapal Ltd. v. CCE, (2015) 8 SCC 519 :

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"20. Natural justice is an expression of English Common Law. Natural justice is not a single theory—it is a family of views. In one sense administering justice itself is treated as natural virtue and, therefore, a part of natural justice. It is also called “naturalist” approach to the phrase “natural justice” and is related to “moral naturalism”. Moral naturalism captures the essence of commonsense morality—that good and evil, right and wrong, are the real features of the natural world that human reason can comprehend. In this sense, it may comprehend virtue ethics and virtue jurisprudence in relation to justice as all these are attributes of natural justice. We are not addressing

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ourselves with this connotation of natural justice here."

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"28. It is on the aforesaid jurisprudential premise that the fundamental principles of natural justice, including audi alteram partem, have developed. It is for this reason that the courts have consistently insisted that such procedural fairness has to be adhered to before a decision is made and infraction thereof has led to the quashing of decisions taken. In many statutes, provisions are made ensuring that a notice is given to a person against whom an order is likely to be passed before a decision is made, but there may be instances where though an authority is vested with the powers to pass such orders, which affect the liberty or property of an individual but the statute may not contain a provision for prior hearing. But what is important to be noted is that the applicability of principles of natural justice is not dependent upon any statutory provision. The principle has to be mandatorily applied irrespective of the fact as to whether there is any such statutory provision or not."

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"32. xxxxxxx

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21. In Board of Mining Examination v. Ramjee [(1977) 2 SCC 256 : 1977 SCC (L&S) 226] , the Court has observed that

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natural justice is not an unruly horse, no lurking landmine, nor a judicial cure-all. If fairness is shown by the decision-maker to the man proceeded against, the form, features and the fundamentals of such essential processual propriety being conditioned by the facts and circumstances of each situation, no breach of natural justice can be complained of. Unnatural expansion of natural justice, without reference to the administrative realities and other factors of a given case, can be exasperating. The courts cannot look at law in the abstract or natural justice as mere artefact. Nor can they fit into a rigid mould the concept of reasonable opportunity. If the totality of circumstances satisfies the court that the party visited with adverse order has not suffered from denial of reasonable opportunity, the court will decline to be punctilious or fanatical as if the rules of natural justice were sacred scriptures.

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33. In his separate opinion, concurring on this fundamental issue, K. Ramaswamy, J. echoed the

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aforesaid sentiments in the following words : (ECIL case [(1993) 4 SCC 727 : 1993 SCC (L&S) 1184 : (1993) 25 ATC 704] , SCC p. 773, para 61)

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“61. It is now settled law that the proceedings must be just, fair and reasonable and negation thereof offends Articles 14 and 21. It is well-settled law that the principles of natural justice are integral part of Article 14. No decision prejudicial to a party should be taken without affording an opportunity or supplying the material which is the basis for the decision. The enquiry report constitutes fresh material which has great persuasive force or effect on the mind of the disciplinary authority. The supply of the report along with the final order is like a post-mortem certificate with putrefying odour. The failure to supply copy thereof to the delinquent would be unfair procedure offending not only Articles 14, 21 and 311(2) of the Constitution, but also, the principles of natural justice.”

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"35. From the aforesaid discussion, it becomes clear that the opportunity to provide hearing before making

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any decision was considered to be a basic requirement in the court proceeding. Later on, this principle was applied to other quasi-judicial authorities and other tribunals and ultimately it is now clearly laid down that even in the administrative actions, where the decision of the authority may result in civil consequences, a hearing before taking a decision is necessary. xxxxxxx"

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"40. In this behalf, we need to notice one other exception which has been carved out to the aforesaid principle by the courts. Even if it is found by the court that there is a violation of principles of natural justice, the courts have held that it may not be necessary to strike down the action and refer the matter back to the authorities to take fresh decision after complying with the procedural requirement in those cases where non-grant of hearing has not caused any prejudice to the person against whom the action is taken. Therefore, every violation of a facet of natural justice may not lead to the conclusion that the order passed is always null and void. The validity of the order has to be decided on the touchstone of “prejudice”. The ultimate test is always the same viz. the test of prejudice or the test of fair hearing."

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In Union of India v. Col. J.N. Sinha, (1970) 2 SCC 458

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at page 460,

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"8. xxxxxxx As observed by this Court in A.K. Kraipak v. Union of India [(1969) 2 SCC 262 : AIR 1970 SC 150] “the aim of rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. In other words they do not supplant the law but supplement it”. It is true that if a statutory provision can be read consistently with the principles of natural justice, the courts should do so because it must be presumed that the Legislatures and the statutory authorities intend to act in accordance with the principles of natural justice. But if on the other hand a statutory provision either specifically or by necessary implication excludes the application of any or all the principles of natural justice then the court cannot ignore the mandate of the Legislature or the statutory authority and read into the concerned provision the principles of natural justice. Whether the exercise of a power conferred should be made in accordance with any of the principles of natural justice or not depends upon the express words of the provision conferring the power, the nature of the

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power conferred, the purpose for which it is conferred and the effect of the exercise of that power."

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In view of the law laid down by the Hon'ble Supreme Court in the above referred judgments, though Rules 14 and 15 of Rules 2017 do not expressly provide an opportunity to the petitioner/employer in the proceedings, the principles of natural justice needs to be read into a rule on granting of an opportunity of being heard. The provision for opportunity to the petitioner in the proceedings under

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Rules 14 and 15 of Rules, 2017 would not in any way prejudice the rights of the claimant or the insurer. On the other hand, it would assist the Insurance company to avoid any possible incorrect/wrong claims by the employees of the petitioner, thereby achieving the object and purpose of the policy to the maximum extent.

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It is settled position as held in the judgments referred

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to above in applying the procedural fairness, the petitioner

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is to be provided an opportunity of being heard as the outcome of the proceedings under Rule 14 and 15 of Rules 2017 will have financial implication on the petitioner, as a result, the petitioner would suffer civil consequences in the form of higher premium to be paid. It is settled position of law that even if the statute is silent of granting an opportunity, the same can be extended to the affected person unless the grant of such opportunity is specifically prohibited/restricted under the said statute. The opportunity can also be further denied if such opportunity would have the effect of paralyzing the entire process. In the present case, there is no provision in Rules 2017 specifically restricting the opportunity to the petitioner. Considering the nature of the contract, claims and the opportunity agitated by the petitioner, the petitioner's presence before respondent No.1 would neither prejudice rights of any of the parties nor paralyse the entire process.

¶168

¶169

On consideration of the legal position as held by the Hon'ble Apex Court above, this Court is of the opinion that the employer has the right to be heard in the proceedings under Rules 14 and 15 of the Rules 2017. To provide an opportunity to the employer as and when the claim/complaint is made under Rule 14 of Rules 2017, the Insurance Ombudsman is bound to issue notice to the employer/ Company contributed the insurance premium. The final award can be made under Rule 15 of Rules 2017 on further consideration of the contentions raised by the employer.

¶170

In view of the preceding analysis, the following;

¶171

ORDER

¶172

i) Writ petition is allowed in-part.

¶173

ii) The Insurance Ombudsman is directed to notify the employer before passing the award under Rule 15 of the Rules 2017 in the pending cases

¶174

¶175

as well as in the complaints to be filed in future under Rule 14 of the Rules 2017.

¶176

iii) It is open to the parties to make a representation to competent authority seeking amendment to the extent stated above to the Insurance Ombudsman Rules, 2017.

¶177

iv) The petitioner to release the amount in favour of respondent no.3 within three weeks if not already paid.

¶178

Sd/JUDGE

¶179

M/S Toyota Kirloskar Motor Pvt. Ltd. v. the Insurance Ombudsman

Case brief

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M/S Toyota Kirloskar Motor Pvt. Ltd. v. the Insurance Ombudsman

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

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