HC orders IFFCO Tokio to continue health insurance in J-K amid legal dispute

SRINAGAR — The High Court of Jammu and Kashmir & Ladakh has ordered IFFCO Tokio General Insurance Company to continue providing health insurance under the Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) SEHAT scheme in J&K.

As per the reports by the news agency KNS, the decision comes amid a legal dispute between the insurance company and the Jammu and Kashmir Government over the continuation of the contract, which was initially set to expire on March 14, 2025.

The AB-PMJAY-SEHAT scheme was launched by the Jammu and Kashmir Government to offer free health coverage to all residents, including government employees and retirees. The program provides up to Rs 5 lakh in annual health insurance coverage per family, ensuring access to quality healthcare through a network of empanelled hospitals.

IFFCO Tokio was awarded a three-year contract to implement this scheme, starting in March 2022. However, in November 2023, the company informed the State Health Agency (SHA) that it would not renew the contract for the third year, citing its decision to withdraw after the second year which triggered concerns about the continuity of healthcare services for the beneficiaries, leading the government to take legal action.

The court’s ruling said that the contract between the parties is not merely a commercial agreement but a vital public service and the decision to terminate the contract prematurely could have severe consequences for the people of Jammu and Kashmir, especially those who rely on the scheme for critical healthcare needs.

The court said that approximately 1,200 to 1,500 medical procedures are carried out daily under this scheme, underscoring its importance.

The government argued that IFFCO Tokio’s attempt to exit the contract was not only a breach of its obligations but also a threat to public health and safety. The court agreed, stating that the insurance company could not simply walk away from its responsibilities without ensuring that adequate measures were in place to protect the beneficiaries.

In its defence, IFFCO Tokio claimed that the contract allowed for such termination under specific clauses, arguing that the company was within its rights. However, the court rejected this argument, stating that the terms of the contract did not permit a unilateral exit without just cause.

The court further ruled that the insurance company must continue its services until the dispute is resolved through arbitration.

The court further said that insurance companies, whether in the public or private sector, are governed by the Insurance Act, which mandates that their actions must align with public policy and the greater good.

The insurance sector’s primary role is to provide services that benefit the public, particularly in critical areas like healthcare, the judgment said.