Allowed

Prakratik Society, v. the New India Assurance Company Limited

Rajasthan HC2 Aug 2024ARBAP/21/2023

Case brief

AI extract

What is this about?

The High Court allowed five connected arbitration applications filed by a hospital against an insurance company for non-payment of health insurance bills under the BSBY scheme. The Court appointed a sole arbitrator to adjudicate the dispute, rejecting the insurer's defenses regarding limitation and arbitrability.

What did the court decide?

Arbitration Applications were allowed and Mr. Dhirendra Singh Rajawat was appointed as the sole arbitrator to adjudicate the dispute.

Prakratik Society, Vs the New India Assurance Company Limited — Arbitration | Rajasthan HC (2024)

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[2024:RJ-JP:33059]

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HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR

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S.B. Arbitration Application No. 21/2023

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Prakratik Society, Ranthambore Sevika Hospital, Vinayak Nagar, Housing Board Road, Ranthambore Through Its Authorized Signatory.

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----Petitioner

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Versus

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The New India Assurance Company Limited, Bsby Project Office,b2, Sethi Colony, Govind Marg, Jaipur (Rajasthan) Through Its Authorized Signatory.

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----Respondent

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Connected With

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S.B. Arbitration Application No. 22/2023

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Prakratik Society, Ranthambore Sevika Hospital, Vinayak Nagar, Housing Board Road, Ranthambore Through Its Authorized Signatory.

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----Petitioner

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Versus

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The New India Assurance Company Limited, Bsby Project Office B2, Sethi Colony, Govind Marg Jaipur(Rajasthan) Through Its Authorized Signatory.

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----Respondent

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S.B. Arbitration Application No. 23/2023

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Prakratik Society, Ranthambore Sevika Hospital, Vinayak Nagar, Housing Board Road, Ranthambore Through Its Authorized Signatory.

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----Petitioner

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Versus

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The New India Assurance Company Limited, Bsby Project Office B2, Sethi Colony, Govind Marg Jaipur, (Rajasthan) Through Its Authorized Signatory.

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----Respondent

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S.B. Arbitration Application No. 24/2023

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Prakratik Society, Ranthambore Sevika Hospital, Vinayak Nagar, Housing Board Road, Ranthambore Through Its Authorized Signatory.

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----Petitioner

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Versus

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The New India Assurance Company Limited, Bsby Project Office, B2, Sethi Colony, Govind Marg Jaipur(Rajasthan) Through Its Authorized Signatory.

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----Respondent

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S.B. Arbitration Application No. 25/2023

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Prakratik Society, Ranthambore Sevika Hospital, Vinayak Nagar,

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[2024:RJ-JP:33059] (2 of 11) [ARBAP-21/2023]

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Housing Board Road, Ranthambore Through Its Authorized Signatory.

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----Petitioner

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Versus

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The New India Assurance Company Limited, Bsby Project Office, B2, Sethi Colony, Govind Marg Jaipur(Rajasthan) Through Its Authorized Signatory.

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----Respondent

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For Petitioner(s) : Mr. Maneesh Sharma For Respondent(s) : Mr. Rishipal Agarwal Mr. Vimal Kumar Yadav

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HON'BLE MR. JUSTICE SUDESH BANSAL Order

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02/08/2024

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In all five Arbitration Applications, applicant-hospital and respondent-Insurance Company are common parties and grievances are also common, however, by virtue of five separate applications, dispute in respect of not acknowledging the claim of the applicant for respective five years i.e. 2016, 2017, 2018, 2019 and 2020 have been raised, therefore, with the consent of counsel for both parties, all applications have been heard altogether and would stand decide by this common order.

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Applicant has filed application under Section 11 of the Arbitration and Conciliation Act, 1996 (for short, ‘A&C Act’), for appointment of Arbitrator to resolve the dispute for not releasing the amount claimed by the applicants for years 2016, 2017, 2018, 2019 and 2020, against the treatment provided to the patients under the Government Scheme of Bhamashah Swasthya Bima Yojana (BSBY).

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Heard counsel for both parties and perused the record.

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This is an undisputed fact that a service agreement dated

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10.12.2015 (Annx.1) was entered into between the applicant-

[2024:RJ-JP:33059]

[ARBAP-21/2023]

(3 of 11)

hospital and respondent-Insurance Company wherein insurance company admitted to have an agreement with the Government of the State of Rajasthan, to provide the health insurance services to identify beneficiary families covered under the BSBY and applicant-Hospital, being a recognised and authorised health care provider expressed its desire to join insurer’s network of hospitals to provide required medical facilities and treatment to the beneficiaries as covered under the BSBY policy. As per this service agreement, the payment of the bills for treatment rendered to the patients hospitalized in applicant-hospital under the BSBY policy, was agreed to be made by the insurance company in following terms:-

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Article 6:

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Payment terms

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Hospital will submit online claim report along with the discharge summary and other required documents in accordance with the rates as prescribed in the list of packages given by the health department, Government of Rajasthan.

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The Insurer will have to take a decision and settle every to claim every claim within Twenty one days of the claim being raised by the Institution. In case the insurer decides to reject the claim, the decision will be taken within Twenty one days of the claim being raised by the Institution and shall be informed via email/ web portal with reasons of rejection.

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However if required, Insurer can request the Institution to provide further documents related to treatment to process the case. The insurer can visit the institution to gather verify thie documents related to treatment to the process the case.

(4 of 11)

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[ARBAP-21/2023]

All expenses incurred by the institution in providing the documents including but not limited to postage, photocopying, scanning, printing etc. shall be borne by the institution.

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Payment will be done by Electronic Fund Transfer only.

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The Empanelled Health Care Provider shall have a right of appeal, against a rejection of a Claim, by the Insurer if the Empanelled Health Care Provider feels that the Claim is payable. The request for such appeal should be made within 14 days of receiving the communication regarding rejection failing which the decision of the insurance company shall hold. 7. In the event of more than one procedure is being undertaken in one admission other than those of routine/standard components of the surgical procedure, the package amount will be 75% for second procedure and 50% for third and 25% for each additional procedure of the procedure cost”

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The case of applicant-hospital is that the treatment to the beneficiary covered under the BSBY policy was provided in the hospital and time to time years wise the bills were submitted online before the insurance company. The insurance company has accepted various bills and made payment up to 19.03.2020, however, few bills of the following amount and period, have not been cleared, hence a legal notice dated 31.08.2022 was served upon the insurance company asking to clear the due payment of bills pending for respective years, or to refer the dispute to the Arbitrator. The details of claims which were allegedly due and not cleared by respondent are as under:-

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(I) For the Year 2016

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Rs. 44,612

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(5 of 11) [ARBAP-21/2023]

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[2024:RJ-JP:33059]

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(II) For the Year 2017 Rs. 4,97,135 (III) For the Year 2018 Rs. 7,34,986 (IV) For the Year 2019 Rs. 5,04,636 (V) For the Year 2020 Rs. 3,15,827 Total Rs. 20,97,196

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Counsel for applicant has invited attention of this Court to Article 16 contained in the service agreement, providing remedy to the parties, for settlement of dispute through arbitration in accordance with the A&C Act. For ready reference, the Article 16 is being extracted:-

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“16.1 Any dispute, controversy or claims arising out of or relation to this Agreement or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the provisions of the (Indian) Arbitration and Conciliation Act, 1996.

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16.2 The arbitral tribunal shall be composed of three arbitrators, one arbitrator appointed by each Party and one another arbitrator appointed by the mutual consent of the arbitrators so appointed.

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16.3 The place of arbitration shall be and any award whether interim or final, shall be made, and shall be deemed for all purposes between the parties to be made, in .

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16.4 The arbitration procedure shall be conducted in the English language and any award or awards shall be rendered in English. The procedural law of the arbitration shall be Indian law.

(6 of 11)

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[ARBAP-21/2023]

16.5 The award of the arbitrator shall be final and conclusive and binding upon the Parties, and the Parties shall be entitled (but not obliged) to enter judgement thereon in any one or more of the highest courts having jurisdiction.

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16.6 The rights and obligations of the Parties under, or pursuant to, this Clause including the arbitration agreement in this Clause, shall be governed by and subject to Indian law.

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16.7 The cost of the arbitration proceeding would be borne by the loser of the arbitration procedure, as determined by the award of the arbitrator. In case there is no winner of the arbitration proceeding, as determined by the award of the arbitrator, the cost shall be borne by the parties on equal sharing basis.”

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It has been contended that since the respondent-insurance company did not respond to the legal notice 31.08.2022, hence these applications have been filed on 01.02.2023, seeking appointment of arbitration and to refer the dispute to Arbitrator for settlement.

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Respondent-Insurance Company has filed separate reply to each arbitration application, but has taken a common defence i.e. (I) That the claim for the due bills for the years 2016, 2017, 2018 and 2019 is barred by limitation and,

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(II) The claim of bills post to 12.12.2019 i.e. for the year 2020 is not arbitrable claim, since the contract of the insurance company with the State Government, to acknowledge the payment for the treatment of patients under the Bhamashah Swasthya Bima

[2024:RJ-JP:33059]

[ARBAP-21/2023]

(7 of 11)

Yojana (BSBY) scheme was effective for the period only from 13.12.2015 to 13.12.2017 and then, w.e.f. 13.12.2017 to 12.12.2019, hence after 12.12.2019, the insurance company is not liable to acknowledge the bills for the year 2020.

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Learned counsel appearing on behalf of the respondentinsurance company states that after 12.12.2019, the bills raised by the petitioner can be acknowledged by Rajasthan State Health Assurance Agency (RSHAA), but he has not been impleaded as party in this arbitration agreement. In such circumstances, the arbitration applications are liable to be dismissed.

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Heard. Considered.

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Having considered the pleadings of both parties and rival contentions raised by counsel for both parties, at the outset, this Court finds that existence of the arbitration agreement to settle the dispute in respect of claim put forth by the applicant-hospital against the respondent-insurance company under the service agreement, is not in dispute between the parties. In A&C Act, 1996, the provision of Section 11(6A) reads as under:

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“ (6A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement. ”

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As per the recent judgment of Hon’ble Supreme Court delivered in case of In Re: Interplay between Arbitration Agreements under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act 1899 [AIR 2024 SC 1] , Section

(8 of 11)

[2024:RJ-JP:33059]

[ARBAP-21/2023]

11(6A) is in operation and therefore, this Court is required to see the existence of arbitration agreement between the parties while dealing with the application for appointment of Arbitration and referring the dispute to the Arbitrator.

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As far as plea of the respondent-Insurance Company to treat the claim of bills for the years 2016, 2017, 2018 and 2019 as barred by limitation is concerned, it would apposite to refer to Article 6(2) contained in the service agreement (Annx.1), extracted hereinabove, wherein it has been agreed between the parties that the insurer will have to take a decision and settle every claim within 21 days of the claim being raised by institution. In case, the insurer decides and reject the claim, the decision will be taken within 21 days of the claim being raised by the institution and shall be informed by E-mail/ Web Portal with reasons of rejection. Further, in Article 6(6), the right of appeal has been provided to the empanelled health care provider against rejection of claim by the insurer.

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Further the Supreme Court, in case of Arif Azim Co. Ltd. Vs. Aptech Ltd. [2024 5 SCC 313] , has concluded that the arbitration petition having been filed within a period of three years from the date when the respondent fail to comply with the notice of invocation of arbitration issued by the petitioner is not hit by limitation.

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In the present case, the applicant served notice dated 31.08.2022 invoking the arbitration agreement and seeking reference of the dispute to the arbitration. Thereafter, the present applications have been filed on 01.02.2023. Further in terms of

(9 of 11)

[2024:RJ-JP:33059]

[ARBAP-21/2023]

payment for bills, applicant had submitted bills time to time and payment of bills was being released yearly and last payment has been released up to 19.03.2020, thereafter, applicant served legal notice on 31.08.2022, raising a claim for non-payment of his due bills for previous years. Thereafter, the present arbitration applications, filed within a period of three years from the date of invocation of arbitration clause vide notice dated 31.08.2022 which may not be termed as barred by limitation. As far as plea of claims for non-payment of due bills for the years 2016, 2017, 2018 and 2019 being stale is concerned, in the light of acknowledging the bills by insurance company up to 19.03.2020, the Arbitration Tribunal shall consider such claims on merits, including to decide the issue of limitation on merits as well after recording evidence of parties.

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Here in these matters, it is not the case of insurance company that the claim for bills for the years 2016, 2017, 2018 and 2019 which were uploaded online by the applicant, in terms of the payment terms, on the portal of insurance company were ever rejected by the insurance company, nor any order of rejection was informed to applicant-hospital in terms of Article 6(2). Thus, unless claim of pending bills is not rejected by the insurance company, for the purpose of referring the dispute to settle such claim, cause of action occurred on giving legal notice can be termed as barred by limitation.

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In respect of the second plea of the insurance company that the claim of bills for the year 2020 is not arbitrable, since the agreement entered into by the insurance company with the

(10 of 11)

[2024:RJ-JP:33059]

[ARBAP-21/2023]

Government to acknowledge the bills of BSBY scheme has come to an end w.e.f 12.12.2019 is concerned, This Court finds that this issue is also mixed question of facts and law, which is required to be considered and decided by the Arbitration Tribunal.

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This Court is of considered opinion that when the existence of arbitration agreement is not in dispute and a dispute has arisen and prima facie application seeking appointment of Arbitration to refer the dispute for Arbitration, an independent, impartial and neutral Arbitration Tribunal of sole Arbitrator needs to be appointed. In view of two judgments expounded by the Apex Court in case of TRF Ltd. Vs. Energo Engineering Projects Ltd. [(2017) 8 SCC 377] , which has been followed in case of Perkins Eastman Architects DPC Vs. HSCC (India) Ltd. [(2020) 20 SCC 760] , may be relied upon and moreover, considering the quantum of claim of bills in dispute, counsel for both parties are also agreeable that if this Hon’ble Court has decided to appoint the Arbitrator, then instead of panel of three Arbitrators, only a sole Arbitrator be appointed in order to lessen the final burden of expenses of Arbitration proceedings on the parties.

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Accordingly, the present Arbitration Applications are allowed and this Court appoints Mr. Dhirendra Singh Rajawat, Rtd. District Judge, Address:- ‘Rajawat Bhawan’, behind the jail, west corner of Police Line, Bajariya, Sawai Madhopur, Mobile No.- 94144-63248 as sole Arbitrator, to adjudicate the dispute between parties in accordance with the provisions of the A&C Act.

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The Arbitration fee shall be payable in accordance with the provisions of contained in the Manual of Procedure for Alternative

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[ARBAP-21/2023]

Dispute Resolution, 2009 as amended by the Manual of Procedure for Alternative Resolution (Amendment), 2017 vide notification dated 23.03.2017 read with 4^th Schedule appended to the A&C Act. 21. The Registry is directed to intimate the Arbitrator Hon’ble Mr. Dhirendra Singh Rajawat, for his approval.

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All other issues may be raised by the parties before the Arbitrator, which shall be considered in accordance with law. 23. Since as per Section 29A of the Arbitration Act, 1996, the arbitration proceedings are required to be concluded within scheduled time as stipulated therein, it is expected from the parties to appear before the Arbitrator on 30^th August, 2024 or any other date as informed by the Arbitrator to parties or agreed between parties with the consent of Arbitrator, and parties shall provide E-mail/ Contact Number/ Mobile Number of themselves as also of their authorised representatives/ lawyers, appearing on their behalf respectively, before the Arbitration Tribunal, in order to facilitate the Arbitrator to send information to the parties, whenever required. The information send by the Arbitrator, on such address/ E-mail/ cellphone of the parties/ their authorized representatives/ lawyers, shall be treated as sufficient unless same is not changed.

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The Arbitration Applications stand disposed of.

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A copy of this order be placed in each connected file.

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(SUDESH BANSAL),J

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RONAK JAIMAN/70-74

Prakratik Society, v. the New India Assurance Company Limited

Case brief

What is this about?

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Prakratik Society, v. the New India Assurance Company Limited

Case brief

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