Srinagar: The J&K High Court today dismissed a petition by the Jammu & Kashmir government seeking a direction to restrain IFFCO-TOKIO General Insurance Company from exiting from the implementation of Ayushman Bharat SEHAT scheme in the Union Territory.
The Delhi-based insurance company had executed a contract with the J&K Union Territory for three years, commencing 10th of March, 2022. Ordinarily, the contract agreement would have subsisted till 14th March, 2025.
However, in November 2023, the insurer informed the government that it is not interested in renewing the contract further. The present policy ends on 14th March, 2024.
In response, the Chief Executive Officer, State Health Agency (SHA), J&K, asked the company to continue as insurer but the respondent company, informed that they have decided not to accord their consent for the renewal of the contract.
In the said communication, the respondent company noted that SHA, J&K, has enough time to make alternative arrangements with the view to prevent the beneficiaries from suffering on account of interpretation of the contract. It subsequently sent a notice of exit from the contract.
The UT government filed a writ under Section 9 of the Arbitration and Conciliation Act and sought that the respondent insurer be directed to restrain from opting out of the contract for implementation of Ayushman Bharat- Pradhan Mantri Jan Arogya Yojana & Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana – SEHAT in the Union Territory of J&K beyond 14.03 2024.
It also sought that the respondents be directed to continue the contract up to 14.03.2025 in the interest of patient-care and public at large and pass an order directing the respondent to undertake its contractual liability.
According to the government, approximately 1200-1500 medical procedures take place daily under the scheme.
Justice Wasim Sadiq Nargal adjudicated the matter saying that by way of a Section 9 petition under the Act, a party cannot seek specific performance of the contract. Since the insurance contract stands terminated, this court cannot intervene under Section 9 of the Arbitration and Conciliation Act to direct specific performance of the contract.
Further, the specific performance of determinable contracts is barred under Section 14 of Specific Relief Act, with a necessary corollary, even injunction is barred to be granted under Section 41(e) of the Specific Relief Act, 1963 wherever the contract is not specifically enforceable, Justice Nargal said.
The judge observed that on the plain reading of Clause 9.1 of Insurance Contract, the contract agreement is prima facie determinable, as such the contract is not specifically enforceable under Section 14 of the Specific Relief Act.
“Further, injunction under Section 41 (e) of the Act cannot be granted in favour of the petitioner since the contract is not specifically enforceable. Even if the petitioner would have passed the litmus test of Section 14 and Section 41 (e) of Specific Relief Act, as per the law laid down by the Hon’ble Supreme Court mentioned supra, the interim relief in the form of directing the respondents to continue with the insurance contract could not have been granted as it will amount to granting of relief of specific performance of contract, which is beyond the scope of Section 9 of the Arbitration and Conciliation Act,” he said.
“The law” he said “is well settled that whether the termination/exit notice met the requirement of the contract or not and thus, whether the termination/exit was valid or not, would be questions which are required to be examined and adjudicated upon by the Arbitrator. In light of the aforesaid, the argument of the state that the exit notice served by the respondent Company was arbitrary and without assigning any reason does not hold ground in the instant petition which has been preferred under Section 9 of the Arbitration and Conciliation Act, 1996 seeking interim relief.
He held the petition filed under Section 9 of the Arbitration and Conciliation Act, 1996 to be without any merit and accordingly dismissed it in limine along with connected application.
However, the court made it clear that the observations made in the order, both on facts and in law, are only a prima facie evaluation undertaken for the purpose of passing this order under Section 9 of the Act.
“The Arbitral Tribunal which is yet to be constituted, shall not be bound by any of the observations made in this order. The Arbitral Tribunal shall deal with the issues raised before it, even if they are the same as raised before this Court, independently, without, being influenced by any of observation made in this order or the findings recorded by this Court, prima facie,” said the court.
