The Bombay High Court observed that a new born would mean both a full-term baby and a pre-term baby and directed the New India Assurance Company to pay Rs. 11 lakh medical expenses incurred by a woman for the treatment of her twin babies born premature and further also directed to pay an additional sum of Rs 5 lakhs to the woman for attempting to interpret clauses in its insurance policies, contrary to their true spirit, only with a view to avoid honouring claims.

The Bench of Justice Gautam Patel and Justice Neela Gokhale observed that "A full term baby does not become more ‘newer’ any more than a ‘pre-term’ baby becomes an ‘earlier born’ or, to make it even more pointed, ‘old born’. The approach is unreasonable, unjust and contrary to the fundamental utmost good faith ethic of an insurance policy. These submissions are the sheerest casuistry. They cannot be allowed to succeed.”

“The Respondent No. 1 (insurance company) 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. Hence, we deem it fit and proper, in the interests of justice, to direct the Respondent No.1 to pay an amount of Rs. 5 Lakhs as costs of litigation, prompted in addition by its defiance in obeying the directives of its own Regulator.” observed the Bench.

Advocate Ashok Shetty appeared for the petitioner and Advocate DS Joshi appeared for the respondent.

In this case, the petitioner had delivered pre-mature twin baby boys, they had to be admitted to the Neo Natal Intensive Care Unit for life saving treatment. After their discharge from the hospital, the Petitioner had submitted a claim to the 1st Respondent under the insurance policies and claimed Rs. 11,05,953/-, the expenses she had incurred at the NICU for the twins.

The petitioner moved the High Court in the year, 2021 after the Insurance company refused her claims on the ground that the policy only covered newborn babies who were born full-term and not babies born pre-term.

The petitioner argued that the insurance company's refusal to accept her claims was arbitrary and contrary to the Insurance Regulatory And Development Authority of India (IRDAI) guidelines and that there was no rational classification, nor intelligible differentia between new-born and premature babies.

The Court observed that the distinction between a ‘new-born’ and a ‘premature baby’ or a baby born ‘pre-term’ was baseless as a new-born baby could be one which was born ‘full term’ or ‘pre-term’.

The Court further said that “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.”

Accordingly, the writ petition was allowed.

Cause Title- Rita Kirit Joshi v New India Assurance Co & Ors

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