# Lucknow Eye Hospital v. U.O.I. & Ors

- **Citation:** (2023) 3 ILRA 341
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-02-14
- **Case number:** Writ C No. 29501 of 2017
- **Bench:** Mrs. Sangeeta Chandra, Manish Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/lucknow-eye-hospital-v-u-o-i-ors-49814
- **Pages:** 20

## Headnote

C.S.C.,
A.S.G.,
Arun
Pratap
Singh,
Madhukar
Ojha,
Prasoon
Srivastava,
Sanjeev Singh, Satyajit Banerji, Taranjeet
Singh Makker

A. Insurance Law - Unorganized Workers'
Social Security Act, 2008 - Rashtriya
Swastha Bima Yojana - The beneficiaries,
who are non BPL categories of informal
Sector, were entitled to hospitalization
coverage of upto Rs. 30,000/- for most of
the diseases - Insurance policy - Nonpayment of premium - Effect - Held,
insurance coverage of the insured is as per
the premium paid. Existence/continuance
of any policy is dependant on payment of
premium and non payment of the same
would result in the end of the Insurance
Policy and claim could be repudiated on
that ground alone. (Para 40)

B. Constitution of India - Article 226 -
Writ - Judicial review - Scope - Contract
between the petitioner and Insurance
company - How far can be interfered with
- Held, it is a non statutory contract which
has an arbitration clause appended to it
which had been signed by the petitioner
with open eyes. If the petitioner claims
any
breach
of
such
contract,
the
appropriate remedy for the petitioner is to
approach
the
alternative
Dispute
Redressal Forum/ Arbitral Tribunal as
mentioned
in
clause
16.7
of
the
agreement. (Para 42 and 52)

Writ petition dismissed. (E-1)

List of Cases cited :-

## Text

_Characters 0–39,992 of 68,350. This is a partial read: ask again with offset=39992 for what follows._

3 All. Lucknow Eye Hospital Vs. U.O.I. & Ors.
341
permitted
to
grant
recognition
to
institutions
imparting
education
and
training or register any such institution,
except in accordance with, and to the extent
permissible under the scheme and terms of
the Act. No mandamus, as sought for, can
be issued.

11. For all the reasons stated above,
the writ petition is dismissed.
----------
(2023) 3 ILRA 341
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 14.02.2023

BEFORE

THE HON'BLE MRS. SANGEETA CHANDRA, J.
THE HON'BLE MANISH KUMAR, J.

Writ C No. 29501 of 2017

Lucknow Eye Hospital ...Petitioner
Versus
U.O.I. & Ors. ...Respondents

Counsel for the Petitioner:
Vijay Dixit

Counsel for the Respondents:
C.S.C.,
A.S.G.,
Arun
Pratap
Singh,
Madhukar
Ojha,
Prasoon
Srivastava,
Sanjeev Singh, Satyajit Banerji, Taranjeet
Singh Makker

A. Insurance Law - Unorganized Workers'
Social Security Act, 2008 - Rashtriya
Swastha Bima Yojana - The beneficiaries,
who are non BPL categories of informal
Sector, were entitled to hospitalization
coverage of upto Rs. 30,000/- for most of
the diseases - Insurance policy - Nonpayment of premium - Effect - Held,
insurance coverage of the insured is as per
the premium paid. Existence/continuance
of any policy is dependant on payment of
premium and non payment of the same
would result in the end of the Insurance
Policy and claim could be repudiated on
that ground alone. (Para 40)

B. Constitution of India - Article 226 -
Writ - Judicial review - Scope - Contract
between the petitioner and Insurance
company - How far can be interfered with
- Held, it is a non statutory contract which
has an arbitration clause appended to it
which had been signed by the petitioner
with open eyes. If the petitioner claims
any
breach
of
such
contract,
the
appropriate remedy for the petitioner is to
approach
the
alternative
Dispute
Redressal Forum/ Arbitral Tribunal as
mentioned
in
clause
16.7
of
the
agreement. (Para 42 and 52)

Writ petition dismissed. (E-1)

List of Cases cited :-

1. Ram Barai Singh and Co. Vs St. of Bihar &
ors.; (2015) 13 SCC 592

2. M/s. Surya Constructions Vs The St. of U.P. &
ors.; (2019) 16 SCC 794

3. ABL International Ltd. & anr.. Vs Export
Credit Guarantee Corp. of India Limited & ors.;
(2004) 3 SCC 553

4. Civil Appeal Nos. 3504-3505 OF 2010; Gas
Authority of India Ltd. Vs Indian Petrochemicals
Corporation Ltd. & ors. decided on 08.02.2023

5. Mah. Chess Association Vs U.O.I. & anr.;
(2020) 13 SCC 285

6. Writ-C No. 18949 of 2019; Anand Polyclinic
and Trauma Centre & anr. Vs St. of U.P. and 3
others decided on 07.08.2019

7. Writ-C No. 1048 of 2019; Jeevan Dhara
Hospital and Research Centre & anr. Vs St. of
U.P. & ors. decided on 05.07.2019

8. Interim Order dated 21.05.2019 in Writ-C
No.17347 of 2019; M/s Ashirwad Hospital and
Research Centre & anr. Vs U.O.I. & ors.

9. Radhakrishna Agarwal Vs St. of Bihar; (1977)
3 SCC 457
342 INDIAN LAW REPORTS ALLAHABAD SERIES
10. Banchhanidhi Rath Vs St. of Orissa; (1972) 4
SCC 781

11. Har Shankar Vs Deputy Excise and Taxation
Commissioner; (1975) 1 SCC 737

12. Mahavir Auto Stores Vs Indian oil Corp.;
(1990) 3 SCC 752

13. St. of U.P. Vs Bridge and Roof Comp. India
Ltd; (1996) 6 SCC 22

14. Verigamto Naveen Vs Government of A.P.;
(2001) SCC 344

15. ABL International Ltd Vs Export Credit
Guarantee Corp of India Ltd; (2004) 3 SCC 553.

(Delivered by Hon'ble Mrs. Sangeeta
Chandra, J.
&
Hon'ble Manish Kumar, J.)

1. Heard Sri Vijay Dixit, learned
counsel for the petitioner, learned Standing
Counsel appearing for the State of U.P. i.e.
respondent no. 3, Sri Madhukar Ojha,
learned counsel for the respondent no. 4,
Sri Sanjeev Singh, learned counsel for the
respondent no. 6, Sri Satyajit Banerji,
learned counsel for respondent no. 7 and
there is a request for adjournment on the
ground of illness on behalf of Sri Taranjeet
Singh Makkar, who appears for the HDFC
Ergo General Insurance Co. Ltd-respondent
no. 8. Learned counsel for the petitioner
has stated that all payments due from
respondent no. 8 have been received by the
petitioner no lis survives in so far as the
respondent no. 8 is concerned, therefore,
this Court has proceeded to hear the matter
finally.

2. It is the case of the petitioner that
for providing social security and welfare of
the unorganized workers and for matters
connected therewith and incidental thereto,
the Government of India introduced the
Unorganized Workers' Social Security Act,
2008, and introduced a Welfare Scheme for
unorganized workers in the name of
Rashtriya
Swastha
Bima
Yojana
(hereinafter referred to as 'the RSBY') to
cover a number of non BPL categories of
informal Sector including street vendors,
domestic workers, Beedi workers, building
and construction workers and workers who
had worked for more than 15 days in
MNREGA for covering diseases which
involved hospitalization. The beneficiaries
under
the
Scheme were
entitled
to
hospitalization
coverage
of upto
Rs.
30,000/- for most of the diseases and the
coverage was extended upto five Members
of the same family. The Scheme was
sponsored by the Central Government
which had to pay 75 per cent of the
premium and 25 per cent of the premium
was to be paid by the State Government, in
most of the States of the Country.

3. Under the RSBY, the ICICI
Lombard General Insurance Company Ltd.
was
empaneled
for
various
districts
including the District Lucknow and the
ICICI
Lombard
General
Insurance
Company Ltd. entered into an agreement
with the Government of U.P. to provide
health insurance services to the persons
below poverty line and also beneficiaries
covered under the RSBY. The guidelines
were issued by the Government of India
and also by the State Government for
settlement of claim, the latest being the one
issued on 17.07.2012 by the Government of
India and under Clause 2(iii), it has been
provided that in case the Insurance
Company has not received the necessary
premium, then also they had to settle the
claim of the hospital. However, liberty was
granted to the Insurance Company to
indicate that payment will be made after
3 All. Lucknow Eye Hospital Vs. U.O.I. & Ors.
343
premium
is
received.
The
Insurance
Company had to make a settlement of the
claim within thirty days of receipt of the
same but actual payment had to be made
after premium was received. Since the
ICICI
Lombard
General
Insurance
Company Ltd. was nominated for the
District of Lucknow, the petitioner-Hospital
entered into an agreement with ICICI
Lombard General Insurance Company Ltd.

4. The contract between the petitioner
and the ICICI Lombard General Insurance
Company Ltd. was for the financial year
2012-13, 2013-14 & 2014-15 and each year
a fresh contract was signed. The petitioner
provided
health
services
to
various
beneficiaries and bills for payment were
raised which was cleared by the Insurance
Company up to 31.10.2014. In the year
2015,
various
Grievance
Redressal
Committees were constituted by the RSBY
in order to effectively address the grievance
raised by any of the parties. Since certain
claims of the petitioner were not settled by
the ICICI Lombard General Insurance
Company Ltd. in time, it raised a claim
before the respondent no. 5 i.e. the
Chairman, District Grievance Redressal
Committee/Chief
Medical
Officer,
Lucknow, and also sent repeated e-mails to
the respondent no. 5 for settlement of
claims.

5. On 06.11.2015, the respondent no.
5 informed the petitioner that the claim of
the petitioner-Hospital could not be settled
as the Insurance Company had not received
the premium from the Government and as
soon as the premium is received, the claim
will be settled. The respondent no. 5 on
being approached in this regard passed an
order
after
hearing
both
parties
on
07.09.2016 directing the respondent no. 6
to make all payments to the petitioner
within a fortnight of the order. The payment
was still not made by the respondent no. 6
on the ground that the premium have not
been paid by the State Government.

6. It is the case of the petitioner that
once the respondent no. 5 has passed the
order dated 07.09.2016 directing the
respondent no. 6 to make payment to the
petitioner within a fortnight irrespective of
the fact whether the premium was paid to it
by the Government or not, it was
incumbent upon the Insurance Company to
comply with the directions of respondent
no. 5 and make payments as are due to the
petitioner. When no heed wad paid, the
petitioner approached this Court with the
following main prayers:-

" I. Issue a writ, order or
direction in the nature of certiorari
quashing the part of the clause 2(iii) of the
Government Order dated 17.07.2012 issued
by the Opposite party no. 1, as contained in
Annexure No. 1 to the writ petition, as far it
empowers the Insurance Company to
withheld the payment of the Hospital even
after verification of claims till the premium
is received by the Insurance Company from
the Government.

II. Issue a writ, order or direction
in the nature of Mandamus commanding
the opposite party nos. 6 to 8 to make the
payment of the claims authenticated and
verified by the opposite parties immediately
alongwith interest @ 8 % p.a. on delayed
payment."

7. It has been argued by the learned
counsel for the petitioner that because the
Insurance Company is taking shelter of the
provisions of the Government Order dated
17.07.2012, which entitles it to settle the
claim of the Hospital within a month but to
refuse to make payment till it receives
344 INDIAN LAW REPORTS ALLAHABAD SERIES
premium from the Government. The
Government Order dated 17.07.2012 and
its relevant clause has also been challenged.

8. The learned Counsel for the
petitioner
has
placed
reliance
upon
Annexure 14 to the writ petition, which is a
copy of the decision taken by the C.M.O. as
Chairman
of
the
District
Grievance
Redressal Committee. The representative of
the hospital and the Insurance Company
were heard and it was observed that the
hospital had provided free healthcare
services to the beneficiaries under the
agreement with the Insurance Company,
and that reimbursement of its claim by the
Insurance Company had been withheld
only on the ground that there was a dispute
between the State Nodal Agency and the
Insurance Company and no premium has
been paid to it by the State Nodal Agency;
the Insurance Company could not withhold
the amount claimed by the hospital only on
the ground that no insurance premium had
been paid by the State Government/State
Nodal Agency to the Company. The
C.M.O.
had
directed
that
Insurance
Company should pay the hospital bills
raised by it within 15 days. The Chief
Executive Officer of the State Nodal
Agency also wrote to the Insurance
Company on 25.11.2016 directing it to
make payments of dues to the petitioner as
soon as possible.

9. In the counter affidavit filed by the
State Government, it has come out that the
National Grievance Redressal Committee
by its order dated 08.01.2018 had directed
payment of Rs.3.63 crores by the State
Nodal Agency to the Insurance Agencies
for settling of claims of various hospitals.
However, these figures were not final as a
high-powered committee of U.P. Swasthya
Bima Kalyan Samiti had decided to
constitute a third-party audit through expert
IT professionals of the State Government,
to accurately identify the correct figure of
smart
cards
prepared
by
Insurance
Companies and thereafter final payment
would be done by the State Nodal Agency
to the Insurance Companies. In the
agreement dated 01.10.2012, extended
from time to time between the Insurance
Company and the petitioner, the State
Government is not a party and the aforesaid
agreement did not contain any clause for
holding the State Government responsible
for any claim of the petitioner, in any
dispute between the State Nodal Agency
and
the
Insurance
Company.
The
Government of India also in its order dated
17.07.2013 had directed all claims to be
settled mandatorily by Insurance Company
within one month from the receipt of such
claims from the treating hospitals and
wherever necessary premium had not been
received by the Insurance Company and it
becomes the reason for delay in claim
settlement, the Insurance Company would
still take a decision on the claims within the
stipulated time limit and convey to the
concerned hospital clearly that payment
would be made after premium is received.

10. Sri Sanjeev Singh, learned
counsel appearing on behalf of the
respondent no. 6 has pointed out from the
copy of the Contract entered into between
the petitioner-Hospital and respondent no. 6
Article 16 which relates to miscellaneous
provisions and Clause 7 thereof which
relates to the law applicable to the
agreement and Arbitration clause. He has
pointed out sub Clause (ii) & (iii) of Clause
7 wherein it has been provided that any
dispute, controversy or claim arising out of
or in relation to the agreement or the
breach, termination or irregularity thereof,
shall
be
settled
by
Arbitration
in
3 All. Lucknow Eye Hospital Vs. U.O.I. & Ors.
345
accordance
with
the
provisions
of
Arbitration and Conciliation Act, 1996. The
Arbitral Tribunal would be comprised of
three Arbitrators, one Arbitrator appointed
by each party and one another Arbitrator
appointed by mutual consent of the
Arbitrators, so appointed. It has been
pointed out that the place of Arbitration
would be Mumbai and any award whether
interim or final shall be made only in
Mumbai.

11. It has further been argued by Sri
Sanjeev Singh, on the basis of counter
affidavit filed on behalf of the respondent
no. 6 that in terms of the Advisory issued
by
the
Central
Government
dated
17.07.2012, the Insurance Company can
withhold payment to the Hospital in case it
does not receive premium amount. In the
absence of payment of premium by the
Central
and
State
Government,
the
Insurance Company had informed the
petitioner that the claim raised by it will
only be considered after such premium is
paid by the Government under the RSBY. It
is the case of the Insurance Company that
since payment of premium has not been
made, the Insurance Company cannot be
held liable. Moreover, the petitioner on its
own cannot assume that the bills raised by
it are genuine and authenticated by the
answering respondents, as the claims have
not been processed by the Insurance
Company in the absence of premium being
paid to it. Also, the State Nodal Agency
and the Government have raised questions
regarding the correct number of verified
Smart Card for the beneficiaries under the
RSBY and the State Nodal Agency and the
Government
have
been
denying
the
premium amount claimed by the Insurance
Company
and
unless
the
issue
of
verification of Smart Cards is settled by the
Government/State Nodal Agency, it cannot
be said that the entire claim raised by the
petitioner-Hospital
on
the
basis
of
treatment of Smart Card beneficiaries is
genuine and authenticated. It has been
further been argued that the petitioner has
not submitted any document to establish
that the entire claim raised by the petitioner
has been verified and authenticated by the
Insurance Company.

12. It has also been argued that the
order passed by the District Grievance
Redressal Committee dated 07.09.2016 was
passed ignoring the provisions contained in
Clause 2(iii) of the Government Order
dated 17.07.2012 issued by the Central
Government and outstanding premium
amount of Rs. 62.63 crores for Phase 4 & 5
of the RSBY still remains to be paid.

13. The arguments advanced by Sri
Sanjeev Singh, learned counsel for the
respondent no. 6 have been adopted by Sri
Satyajit Banerji, learned counsel appearing
on behalf of respondent no. 7- National
Insurance Company Ltd.

14. Sri Madhukar Ojha, learned
counsel for the RSBY, on the other hand,
has referred to the counter affidavit and
supplementary counter affidavit filed on
behalf of respondent no. 4 wherein it has
been stated that the ICICI Lombard
General Insurance Company Ltd. has
participated in the 4th & 5th rounds of
RSBY launched by the Government of
India in the State of U.P. and the State
Nodal Agency was appointed to implement
the aforesaid Scheme with the help of
Insurance
Companies
nominated/empaneled in this regard. The
State Government/Nodal Agency had to
make payment of State's share of premium
of 25 per cent to the Insurance Company
and the remaining 75 per cent had to be
346 INDIAN LAW REPORTS ALLAHABAD SERIES
paid by the Central Government on the
basis of verified enrollment data of the
identified beneficiaries. The Insurance
Company
enrolled
the
1,06,680
beneficiaries and in the 4th round, raised
invoice for payment of Insurance premium
to the State Nodal Agency. Only 85,452
beneficiaries were found to be correctly
identified,
for
which
the
Insurance
premium of Rs. 2.78 crores was paid to the
ICICI
Lombard
General
Insurance
Company Ltd., in between December 2012
to May, 2013.

15.

The
Insurance
Company
aggrieved by the decision of the State
Nodal Agency regarding number of verified
beneficiaries Smart Cards and premium
paid on that basis approached the State
Grievance
Redressal
Committee
for
rectifying the same. The State Grievance
Redressal Committee found genuine grant
of enrolled beneficiaries as 84,291, for
which Rs. 2.77 crores was to be paid to the
Insurance Company and therefore, Rs.
1,00,000/- that was paid in excess by the
State Nodal Agency was to be recovered
from the Insurance Company.

16. The Insurance Company also
participated in the 5th round of RSBY in
the State of U.P. and the Insurance
Company provided enrollment to 75,587
beneficiaries for which Rs. 1.72 crore was
claimed
as
premium
amount.
On
verification by the State Nodal Agency, the
figure of 53,810 beneficiaries was found to
be correct for which premium of Rs. 1.23
crores was paid to the Insurance Company
between March 2014 to March, 2015. The
Insurance Company again approached the
State Grievance Redressal Committee for
rectifying the alleged wrong verification
but it was found that Rs. 6.03 crore was
recoverable from the ICICI Lombard
General Insurance Company Ltd. and Rs.
9.66 crore was payable to the respondent
no. 6 at the end of 5th round of RSBY. As
per the orders of the National Grievance
Redressal Committee dated 08.01.2018, an
amount of Rs. 3.63 crore has to be
conditionally
paid
to
the
Insurance
Company on production of affidavit that
this amount would be used only to pay the
outstanding dues of Hospitals like that of
the petitioner and after due verification of
the Smart Card, prepared by the Insurance
Company of identified beneficiaries.

17. The High powered Committee of
U.P. Swastha Bima Kalyan Samiti had
decided to constitute a Third Party Audit
through expert IT professionals of the State
Government to accurately access the
correct figure of Smart Cards prepared by
the Insurance Companies and thereafter
final payments shall be made by the State
Nodal Agency to the Insurance Company
concerned.

18. In the counter affidavit filed by
the State Nodal Agency, the respondent
no.4, it has been stated that the Insurance
Company has generated several fraudulent
smart cards for unidentified and ineligible
beneficiaries, and that respondent no.4 has
made payment of the enrolled beneficiaries
by the Insurance Company after due
verification process which has been found
to be correct by the Social Audit Team of
the Government of India constituted on the
directions of the Secretary, Health and
Family Welfare, Union of India, for the
purpose of verification of enrolment
software
processes.
The
verification
process adopted by the State Nodal Agency
was challenged by the Insurance Company
before the State Grievance Redressal
Committee and State Grievance Redressal
Committee made minor enhancement in the
3 All. Lucknow Eye Hospital Vs. U.O.I. & Ors.
347
verified figures and such order was later on
upheld
by
the
National
Grievance
Redressal Committee. A copy of the
recommendations of the Social Audit Team
have been filed as Annexure to the counter
affidavit where it was noted that rejection
by the State Nodal Agency of the figures
provided by the Insurance Companies for
reimbursement was mainly on account of
change in the name of the head of the
family, other than one indicated in the preenrolment data. The Social Audit Team had
found the Insurance Company's claims
unconvincing. The Committee observed
that the enrolment figure for all such smart
cards where there was a change in the name
of the head of the family should be
disallowed, and no premium was required
to be paid to the concerned Insurance
Company in all such cases. It was also
found that the Insurance Company had
issued multiple smart cards on single
Unique Relationship Number (URN). The
State Nodal Agency had stressed that these
duplicate cards were the result of not
following of prescribed procedures by the
Insurance Company in the field during
enrolment as such the possibility of
mischief could not be ruled out. The team
observed that the issue of multiple cards
under the same URN is prohibited. The
State Nodal Agency was directed to
identify beneficiaries of duplicate cards by
analysis of the URN data and payment
should
be
made
to
the
Insurance
Companies only for one single card
thereafter by the State Nodal Agency. Also,
delivery of smart cards to beneficiaries on
the spot i.e. on the date of enrolment itself
was
not
ensured
by
the
Insurance
Company.
Insurance
companies
were
demanding premium on pro rata basis for
all such cards, because according to them,
such cards had been delivered to the
beneficiaries. The State Nodal Agency
emphasised that the Tender Document itself
provided that payment of premium for only
delivered cards is to be made on pro rata
basis. The onus to prove the delivery of
cards to the correct beneficiary was not
delayed beyond the specified period by the
Insurance Company.

19. With regard to the agreement
dated 01.10.2012, which has been made the
basis of the writ petition, it has been argued
on behalf of the State Nodal Agency that
the agreement was exclusively between the
petitioner and the Insurance Company and
the State Nodal Agency was not a party to
the said agreement. With regard to the
Government of India Advisory dated
17.07.2012, it has been submitted that the
Insurance Company has to settle/verify all
claims mandatorily within one month of
receipt of such claims from the Hospitals,
and even if necessary premium has not
been received by the Insurance Company, it
may still verify the claim but make
payment after premium is received. The
Insurance Company has not verified the
claim of the petitioner. Although, no such
advisory was issued by the Government to
withhold even verification of the hospital's
claim.

20. The Social Audit Team constituted
by the State Nodal Agency is on the
directions of the Secretary, Health and
Family Welfare, Union of India for the
purpose of verification of enrollment,
software processing especially with respect
to possibility of fictitious enrollment,
examination of enrolled figures by the
Insurance Companies. The verification
process adopted by the State Nodal Agency
was
challenged
in
State
Grievance
Redressal Committee, which was disposed
of with minor enhancement in verified
figure of beneficiaries and such order was
348 INDIAN LAW REPORTS ALLAHABAD SERIES
upheld
by
the
National
Grievance
Redressal Committee. The payment cannot
be made by the State Nodal Agency
without verification of beneficiaries Smart
Card
as
prepared
by
the
Insurance
Companies.

21. In the supplementary counter
affidavit filed on behalf of respondent no.
4, subsequent developments have been
mentioned wherein the order passed by the
District Grievance Redressal Committee
and the order passed by the State Nodal
Agency to make payment only after
verification, has been brought on record
and it has been pointed out that none of the
orders so passed have been challenged by
any of the Insurance Companies, the
respondent nos. 6, 7 & 8 before any higher
Forum
i.e.
the
National
Grievance
Redressal Committee or any court of law.

22. In a supplementary counter
affidavit filed by the State Nodal Agency, it
has been stated that during the operation of
the RSBY Scheme, the ICICI Lombard
General Insurance Company had reported
certain anomalies to the State Nodal
Agency. On further enquiry, discrepancies
were found true and the same find mention
in the report and in the observations of the
NGRC regarding possibility of fraudulent
claims raised during enrolment process.
The State Nodal Agency, after due
verification and enquiry of all such data
requested the Government of U.P., which
has released 7.27 crores of the State's share
in favour of various Insurance Companies
to be paid to various hospitals/service
providers on 26.03.2021.

23. Sri Sanjeev Singh has stated on
the basis of affidavit filed by the parties
that although the respondent no. 6 has
claimed more than Rs. 64 crores as
premium. The State Nodal Agencies and
the State Governments have admitted an
amount of around Rs. 10 crores only, which
contains part of State share and Central
Government's share.

24. Certain other paragraphs of the
supplementary counter affidavit have been
pointed out by Sri Sanjeev Singh to show
that there is a dispute with regard to
premium being paid and since there is a
dispute with regard to the premium being
paid, the respondent no. 6 has rightly
withheld the payment to the petitioner for
treatment of beneficiaries and claims made
by it. In any case, if the petitioner is
aggrieved by any breach of condition of the
agreement between the Insurance Company
and the petitioner, the appropriate remedy
would be under Clause 16.7 of the
agreement.

25. Learned counsel for the petitioner
has placed reliance upon the judgment
rendered by Hon'ble Supreme Court in the
case of Ram Barai Singh and Co. vs.
State of Bihar and Ors. [(2015) 13 SCC
592] wherein it has been observed that the
constitutional remedy of writ petition is
always available to an aggrieved party and
an arbitration clause in an agreement
between the parties cannot ipso facto
render a writ petition not maintainable.

26. Learned counsel for the petitioner
has also placed reliance upon the judgment
rendered by the Hon'ble Supreme Court in
M/s. Surya Constructions vs. The State
of U.P. and Ors. [(2019) 16 SCC 794]
where the amount payable to the appellant
being wholly undisputed and in fact
admitted in contempt proceedings before
the High Court, still the High Court refused
to interfere in the matter on the ground of
contractual
obligations
and
disputed
3 All. Lucknow Eye Hospital Vs. U.O.I. & Ors.
349
questions of facts. Hon'ble Supreme Court
placed reliance upon the judgment rendered
in ABL International Ltd. and Anr. vs.
Export Credit Guarantee Corporation of
India Limited and Ors. [(2004) 3 SCC
553] to say that once the amount that was
payable was admitted, in pursuance of
agreement entered into between the parties,
then it was not right for the High Court to
refuse the relief prayed for by the appellant
and to relegate the parties to remedies
available under the agreement.

27. Learned counsel for the petitioner
has also placed reliance upon the judgment
of Hon'ble Supreme Court in the case of
Gas Authority of India Ltd. vs. Indian
Petrochemicals Corporation Ltd. and
Ors. passed in CIVIL APPEAL Nos. 35043505 OF 2010, decided on 08.02.2023 and
paragraph 20 thereof, where the Court
observed that although the dispute arises
from a commercial contract, the writ
petition challenging the clauses of such
contract was maintainable as it was not
disputed that Gas Authority of India Ltd.
is a Public Sector Undertaking and
qualifies under the definition of State under
Article 12 of the Constitution. At the time
of entering into contract, GAIL was
enjoying a monopolistic position with
respect to the supply of natural gas in the
country.
The
Indian
Petrochemicals
Corporation
Ltd.,
having
incurred
a
significant
expense
in
setting
up
appropriate infrastructure, had no choice
but to enter into agreement with GAIL.
Thus, there was a clear public element
involved in the dealings between the parties
and writ jurisdiction can be exercised when
the State, even in its contractual dealings,
fails to exercise a degree of fairness or
practices any discrimination.

28. Learned counsel for the petitioner
has also placed reliance upon the judgment
rendered by Hon'ble Supreme Court in the
case of Maharashtra Chess Association
vs. Union Of India and Anr. [(2020) 13
SCC 285] and paragraph 11 thereof, where
it has been held that Article 226 of the
Constitution confers on High Courts the
power to issue writs, and consequently, the
jurisdiction to entertain actions for the
issuance of writs not only for enforcement
of fundamental rights but for any other
purpose.

29. Learned counsel for the petitioner
has referred to various paragraphs in the
said judgment to say that the Hon'ble
Supreme Court has reiterated that the High
Court's powers are plenary in nature and
are purely discretionary and no limits can
be placed upon their discretion and that the
bar relating to alternative remedy has to be
considered to be a rule of self imposed
limitation and it is essentially a Rule of
policy, convenience and discretion and
never a Rule of law. Despite existence of an
alternative
remedy, it
is within the
jurisdiction or discretion of the High Court
to grant relief under Article 226 of the
Constitution.

30. The learned Counsel for the
petitioner
has
pointed
out
from
the
Supplementary Counter Affidavit filed by the
State Nodal Agency that a Coordinate
Division Bench at Allahabad had directed
payment
to
be
made
to
various
hospitals/petitioners
by
the
Insurance
Company, and direction has been issued also
for payment of interest at the rate of 9% per
annum for delay in releasing such amount.
One such writ petition, namely, Writ-C
No.18949 of 2019 was decided on 07.08.2019.
350 INDIAN LAW REPORTS ALLAHABAD SERIES

31. This Court has gone through
Annexures 5, 6 and 7 pointed out by the
counsel for the petitioner. It is apparent
from SCA 5, which is an order dated
07.08.2019 passed in Writ-C No. 18949 of
2019, Anand Polyclinic and Trauma
Centre and another versus State of U.P.
and three others, that the writ petition was
filed for a direction to the Oriental
Insurance Company to pay more than Rs.13
lakhs claimed by the petitioners under the
RSBY within a reasonable time. The Court
passed an Interim Order on 08.07.2019
directing the Managing Director to appear
and explain why a direction be not issued
to make payment with interest at the rate of
12% per annum, and for exemplary cost for
compelling the petitioner to approach the
Court. In pursuance of the same, the
Deputy Manager was present in Court and
filed an affidavit that the amount had been
paid through NEFT/ RTGS after deducting
TDS. The Court directed interest to be paid
from
December
2018
as
the
Chief
Executive Officer of State Nodal Agency
had directed such payment to be made to
the hospital on 05.11.2018.

32. The order dated 08.08.2019 is not
a judgement as no issue was raised
regarding maintainability of the writ
petition for contractual obligations when
the agreement between the parties, none of
whom was State within the meaning of
Article 12 of the Constitution of India,
clearly
provided
for
arbitration
for
settlement of disputes arising out of
contract.

33. This Court has also gone through
Interim
Order
passed
by
the
same
Coordinate Bench dated 05.07.2019 in
Writ-C No. 1048 of 2019:Jeevan Dhara
Hospital
and
Research
Centre
and
another versus State of U.P. and three
others, and Interim Order dated 21.05.2019
in
Writ-C
No.17347
of
2019:
M/s
Ashirwad Hospital and Research Centre
and another versus Union of India and
others. All the Interim Orders refer to the
directions issued by the State Grievance
Redressal Committee to the Regional
Manager of Oriental Insurance company to
make payment to the petitioner's hospitals
and, thereafter, direct to make payments
within one month or to appear in person
before the Court. None of such interim
orders are binding upon this Court.

34. This Court has considered the
judgments as have been cited before us and
finds that the judgment in the case of Ram
Barai Singh and Co. (supra), a writ petition
was filed for interest on delayed refund of
security deposit and against direction for
recovery of labour escalation costs after
completion of contract and the Hon'ble
Supreme Court held that the High Court
failed to notice that the agreement itself had
worked out long back and in the earlier round
of litigation as well as in the instant round of
litigation, the respondents never raised any
objection on the basis of arbitration clause,
therefore, the High Court should not have
remitted the matter on the ground of
alternative remedy where no such objection
was raised by the respondent at any stage.
Availability of arbitration clause did not
always forfeit the right of aggrieved party to
file a writ petition. This Court has carefully
considered the facts and finds that in the case
of Ram Barai Singh and Co. (supra), it was
a question of satisfactory performance of
contract
entered
into
between
the
Superintending Engineer of the Government
of Bihar and the petitioner-company.

35. In the case of M/s. Surya
Constructions (supra), the admitted dues
for extra work done by the petitioner for
3 All. Lucknow Eye Hospital Vs. U.O.I. & Ors.
351
U.P. Jal Nigam was claimed. The High
Court had asked the U.P. Jal Nigam to
decide the representation of the petitioner
and in the decision on such representation,
it had come out that the dues were admitted
and were not being paid on account of
various reasons.

36. In the case of Gas Authority of
India Ltd. (supra), the dispute was
between two Public Sector Undertakings,
GAIL being the monopoly holder in supply
of gas had entered into a contract for
supply for such natural gas with IPCL
which had set up and installed a Plant
investing more than Rs. 4500/- crore in
laying down pipelines between Hazira and
the Plant at Gandhar. There was a dispute
regarding the methodology of supply of gas
and the price of gas. Hon'ble Supreme
Court therefore in the context of such facts
had made observations in paragraph 20,
which has been read before us by the
counsel for the petitioner.

37. In the case of Maharashtra
Chess Association (supra), a private
agreement was entered into between the
appellant and affiliated Society registered
under the Societies Registration Act, 1860
and the second respondent, also a registered
Society and the Governing Authority for
Chess in India in the form of the
Constitution and bye-laws of the latter. The
question
was
with
regard
to
the
place/jurisdiction of Court to entertain the
settlement of any dispute. The Court had
observed that where several courts would
have jurisdiction to try the subject matter of
the dispute, the parties to a Contract can
stipulate that a suit be brought exclusively
before one of the several courts, to the
exclusion of the others. The judgment
rendered in the case of Maharashtra
Chess Association (supra), is clearly
inapplicable to the facts of the petitioner's
case.

38. This Court has found from the
arguments raised by the counsel for the
parties and from the affidavits filed on their
behalf that there is a serious dispute with
regard
to
the
verification
of
the
beneficiaries/Smart Cards in between the
State Nodal Agency and the Insurance
Company.
Learned
Counsel
for
the
Insurance Company, on the other hand,
says that since premium has not been given
due to dispute being raised regarding
verification of Smart Card beneficiaries, it
shall not make any payment to the
petitioner.

39. The petitioner has no doubt
challenged clause 2(iii) of the Central
Government Advisory dated 17.07.2012
which empowered and entitle the Insurance
Company
to
withhold
payment
of
compensation in case of non-payment of
premium. But this Court is of the opinion
that such an Advisory/policy decision is of
a routine nature which is found in all
Insurance Policies.

40. Insurance coverage of the insured
is
as
per
the
premium
paid.
Existence/continuance of any policy is
dependant on payment of premium and non
payment of the same would result in the
end of the Insurance Policy and claim could
be repudiated on that ground alone.
Therefore, the clause in the Government of
India
advisory
is
not
arbitrary
or
unreasonable or violative of Article 14 of
the Constitution.

41. Learned counsel for the petitioner
has pointed out that the petitioner is
claiming payment for services rendered by
it under the agreement.
352 INDIAN LAW REPORTS ALLAHABAD SERIES

42. While considering the question of
scope of judicial review of action by the
State in a matter arising from a contract,
and what is the effect of the contract not
being statutory, and as to what constitutes
public law element to bring in judicial
review in contractual matters, the Supreme
Court in M.P. Power (supra), considered
the
observations
made
by
it
in
Radhakrishna Agarwal versus State of
Bihar (1977) 3 SCC 457; where petitions
were filed against orders of the State
Government revising the rate of royalty
under a lease and the cancellation of the
lease on various grounds. The Court was of
the opinion that the only question which
normally arose in such cases was as to
whether the action complained of was in
conformity with the agreement. It referred
to the earlier judgements rendered, where
the Supreme Court had observed that any
duty or obligation falling upon a public
servant out of a contract entered into by
him as such public servant, cannot be
enforced by the machinery of a writ under
Article 226 of the Constitution.

43. In Banchhanidhi Rath versus
State of Orissa (1972) 4 SCC 781, the
Supreme Court had observed that if a right
is claimed in terms of a contract such a
right cannot be enforced in a writ petition.
In Har Shankar versus Deputy Excise and
Taxation Commissioner (1975) 1 SCC
737; the Constitution Bench had observed
that ''a writ petition is not an appropriate
remedy
for
impeaching
contractual
obligations.'

44. The Court also took the view that
it is the contract and not the executive
power regulated by the Constitution which
governs the relations of the parties. The
Supreme Court in the case of M.P. Power
(supra) referred to the observations made
by it in Mahavir Auto Stores Versus
Indian oil Corporation (1990) 3 SCC 752;
where while referring to judgements in
earlier cases, the Supreme Court had
observed that the rule of reason and rule
against arbitrariness and discrimination,
rules of fair play and natural justice are part
of the Rule of Law applicable in situation
or action by the State instrumentality in
dealing with the citizens. Even though the
rights of citizens are in the nature of
contractual rights, the manner, the method
and motive of a decision of entering or not
entering into a contract, are subject to
judicial review on the touchstone of
relevance and reasonableness, fair play,
natural
justice
equality
and
nondiscrimination in the type of transactions
and nature of the dealing as evident in the
facts and circumstances of a particular case.

45. In State of U.P. versus Bridge and
Roof Company India Ltd (1996) 6 SCC
22; the Supreme Court was dealing with a
case of a writ petition filed by the
respondent therein which was a Public
Sector
Corporation
seeking
payment
allegedly due from the appellant State. The
Court noted that the contract in question
contained articles providing inter-alia for
settlement of disputes by reference to
arbitration.