CWP-24133-20 IN THE HIGH COURT OF PUNJAB AND HARYANA 210 STAR HEALTH AND ALLIE PUNEET GOYAL AND ANOTHER CORAM: HON'BLE MR. JUSTICE Present:- None Mr. Ashwani Gaur, Advocate for respondent no.1 TRIBHUVAN DAHIYA The petition has the award, dated Adalat, Public Utility Services, Panipat 2. Facts of the case in brief are, respondent purchased a health insurance policy for the period from year also from sharp abdomen pain, Acute Pancreatitis 31.07.2016 to authorisation for his cashless treatment was excluded from insurance for a period of two years in terms of exclusion clause 3(b) of the Policy, which reads as under: 2019 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP Date of Decision: STAR HEALTH AND ALLIED INSURANCE COMPANY LIMITED Versus PUNEET GOYAL AND ANOTHER CORAM: HON'BLE MR. JUSTICE TRIBHUVAN DAHIYA None for the petitioner. Mr. Ashwani Gaur, Advocate for respondent no.1 TRIBHUVAN DAHIYA, J. (Oral) The petition has been filed seeking a writ of dated 31.10.2018, Annexure P-1, Public Utility Services, Panipat. Facts of the case in brief are, respondent purchased a health insurance policy - Family Health for the period from 01.08.2015 to 31.07.2016, which was renewed year also from 01.08.2016 to 31.07.2017. On 30.07.2016 sharp abdomen pain, fever and difficulty in breathing Acute Pancreatitis. He remained admitted for treatment in hospital to 08.08.2016. The petitioner/insurance company ation for his cashless treatment on the ground that was excluded from insurance for a period of two years in terms of exclusion of the Policy, which reads as under: IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP-24133-2019 Date of Decision: 16.07.2026 ANCE COMPANY LIMITED …Petitioner(s) …Respondent(s) TRIBHUVAN DAHIYA Mr. Ashwani Gaur, Advocate for respondent no.1. seeking a writ of certiorari quashing 1, passed by the Permanent Lok Facts of the case in brief are, respondent no.1 - the insured Family Health Optima Insurance Plan , which was renewed for the next . On 30.07.2016, the insured suffered fever and difficulty in breathing which was diagnosed as for treatment in hospital from . The petitioner/insurance company rejected on the ground that the ailment/disease was excluded from insurance for a period of two years in terms of exclusion of the Policy, which reads as under: quashing by the Permanent Lok nsured Insurance Plan for the next suffered diagnosed as from rejected ailment/disease was excluded from insurance for a period of two years in terms of exclusion AMAN DUA 2026.07.24 17:18 I attest to the accuracy and authenticity of this judicial document CWP-24133-20 3.0 EXCLUSIONS The Company shall not be liable to make any payments under this policy in respect of any the insured person in connection with or in respect of: 1 and 2 3. During the first two years of continuous operation of insurance cover any expenses on a) b) (conservative, interventional, laparoscropic and open) related to Hepato calculi. All types of management for kidney and genitourinary tract calculi. The insured rejection of his Services Authorities Act, 1987 3. There is no representation on behalf of th 4. Learned counsel for wrongly rejected by the Policy was never brought to made the basis of rejection. In support of the contention the judgment of the Supreme Court Tata AIG General Insurance Company 5. Heard. 6. While accepting the claim, the there was no evidence on record ever explained him, and would therefore not be binding. 2019 -2- 3.0 EXCLUSIONS The Company shall not be liable to make any payments under this policy in respect of any expenses what so ever incurred by the insured person in connection with or in respect of: 1 and 2 xxx xxx xxx 3. During the first two years of continuous operation of insurance cover any expenses on a) xxx xxx xxx b) Gall bladder and pancreatic di (conservative, interventional, laparoscropic and open) related to Hepato-pancreatobiliary including gall bladder and pancreatic calculi. All types of management for kidney and genitourinary tract calculi. accordingly approached the Permanent Lok Adalat his claim by filing an application under Section Services Authorities Act, 1987, whereupon the impugned award was passed. There is no representation on behalf of th Learned counsel for the insured contended that the claim was wrongly rejected by the insurance company was never brought to his notice and, therefore, basis of rejection. In support of the contention the judgment of the Supreme Court in Texco Marketing Private Limited Tata AIG General Insurance Company and others Heard. While accepting the claim, the Permanent Lok Adalat held that no evidence on record to show that ever explained to the insured at the time of submission of , and would therefore not be binding. It further The Company shall not be liable to make any payments under expenses what so ever incurred by the insured person in connection with or in respect of: 3. During the first two years of continuous operation of insurance Gall bladder and pancreatic disease and all treatments (conservative, interventional, laparoscropic and open) related to pancreatobiliary including gall bladder and pancreatic calculi. All types of management for kidney and genitourinary accordingly approached the Permanent Lok Adalat against claim by filing an application under Section 22C of the Legal , whereupon the impugned award was passed. There is no representation on behalf of the petitioner. nsured contended that the claim was as the exclusion clause in the therefore, it could not have been basis of rejection. In support of the contention, he has relied upon Texco Marketing Private Limited v. and others, (2023) 1 SCC 428. Permanent Lok Adalat held that to show that the said exclusion clause was at the time of submission of proposal form by It further held as under: The Company shall not be liable to make any payments under expenses what so ever incurred by 3. During the first two years of continuous operation of insurance sease and all treatments (conservative, interventional, laparoscropic and open) related to pancreatobiliary including gall bladder and pancreatic calculi. All types of management for kidney and genitourinary against of the Legal nsured contended that the claim was as the exclusion clause in the it could not have been , he has relied upon v. Permanent Lok Adalat held that clause was proposal form by AMAN DUA 2026.07.24 17:18 I attest to the accuracy and authenticity of this judicial document CWP-24133-20 15. they repudiate and frivolous grounds, under of the insurance company appears to be an intentional and technical evidence or record to show that condition no. 3(b) and the exclusion clause was explained to the applicant insured, at the time of submission of the proposal form by him. The customer avail the medicl treatment expenses will be reimbursed by the insurer. Therefore, insurer also has duty to act in good faith, which obliges him to enter into the contract, without concealing the maternal fact like exclusion unfair towards the applicant who took the said insurance policy, since 2015, and was renewing it from time to time, since then. 16. terms and clause are proved to have been insurer cannot deny the insured benefit of policy. Accordingly, it can safely to be held that the repudiation of the medical claim of the app Undoubtedly, there is nothing of the Policy was brought to the notice of the insured and agreed to be bound by it acceptance of company liable to 7. A perusal of the Policy following stipulation: If shall contract any disease or suffer from any illness or sustain bodily injury through accident and if such disease, illness or 2019 -3- 15. It is a fraud, on the part of the insurance companies, when they repudiate or illegally deduct the claim amount on technical and frivolous grounds, under garb of exclusion clauses. Such act of the insurance company appears to be an intentional and technical one, to harass the bonafide customers. Also there is no evidence or record to show that condition no. 3(b) and the exclusion clause was explained to the applicant insured, at the time of submission of the proposal form by him. The customer avail the mediclaim insurance Policy, with the hope that medical treatment expenses will be reimbursed by the insurer. Therefore, insurer also has duty to act in good faith, which obliges him to enter into the contract, without concealing the maternal fact like exclusion clause. We feel that act of the insurer is unjust and unfair towards the applicant who took the said insurance policy, since 2015, and was renewing it from time to time, since then. 16. … Hence, it is a settled proposition of law that unless terms and conditions of the Policy clause are proved to have been supplied/explained to insured, the insurer cannot deny the insured benefit of policy. Accordingly, it can safely to be held that the repudiation of the medical claim of the applicant by the respondents was not justified. Undoubtedly, there is nothing on record to establish that exclusion clause 3(b) of the Policy was brought to the notice of the insured and agreed to be bound by its terms. Therefore, no exception acceptance of the claim by the Permanent Lok Adalat company liable to pay the expenses incurred by the insured A perusal of the Policy shows that stipulation: f during the period stated in the Schedule the insured person shall contract any disease or suffer from any illness or sustain bodily injury through accident and if such disease, illness or is a fraud, on the part of the insurance companies, when deduct the claim amount on technical garb of exclusion clauses. Such act of the insurance company appears to be an intentional and one, to harass the bonafide customers. Also there is no evidence or record to show that condition no. 3(b) and the exclusion clause was explained to the applicant insured, at the time of submission of the proposal form by him. The customer aim insurance Policy, with the hope that medical treatment expenses will be reimbursed by the insurer. Therefore, insurer also has duty to act in good faith, which obliges him to enter into the contract, without concealing the maternal fact like clause. We feel that act of the insurer is unjust and unfair towards the applicant who took the said insurance policy, since 2015, and was renewing it from time to time, since then. Hence, it is a settled proposition of law that unless Policy which include exclusion supplied/explained to insured, the insurer cannot deny the insured benefit of policy. Accordingly, it can safely to be held that the repudiation of the medical claim of licant by the respondents was not justified. establish that exclusion clause 3(b) of the Policy was brought to the notice of the insured and he voluntarily Therefore, no exception can be taken to by the Permanent Lok Adalat, making the insurance by the insured on his treatment. that it has been issued with the during the period stated in the Schedule the insured person shall contract any disease or suffer from any illness or sustain bodily injury through accident and if such disease, illness or is a fraud, on the part of the insurance companies, when deduct the claim amount on technical garb of exclusion clauses. Such act of the insurance company appears to be an intentional and one, to harass the bonafide customers. Also there is no evidence or record to show that condition no. 3(b) and the exclusion clause was explained to the applicant insured, at the time of submission of the proposal form by him. The customer aim insurance Policy, with the hope that medical treatment expenses will be reimbursed by the insurer. Therefore, insurer also has duty to act in good faith, which obliges him to enter into the contract, without concealing the maternal fact like clause. We feel that act of the insurer is unjust and unfair towards the applicant who took the said insurance policy, Hence, it is a settled proposition of law that unless which include exclusion supplied/explained to insured, the insurer cannot deny the insured benefit of policy. Accordingly, it can safely to be held that the repudiation of the medical claim of establish that exclusion clause 3(b) voluntarily can be taken to , making the insurance has been issued with the during the period stated in the Schedule the insured person shall contract any disease or suffer from any illness or sustain bodily injury through accident and if such disease, illness or AMAN DUA 2026.07.24 17:18 I attest to the accuracy and authenticity of this judicial document CWP-24133-20 injury shall require the insured Person/s, upon th duly Qualifi or of duly Qualified Surgeon to incur Hospitalization expenses for medical/surgical treatment at any India as an in Person/s the amount of such expenses as are reasonably and necessarily incurred up the sum insured in aggregate in any one period stated in the schedule hereto. The Policy was issued for one year, and ther it had to be renewed every year, or for any particular number of years, to avail its benefits. Meaning thereby, all the benefits explicit terms, as extract treatment of any disease, illness or bodily injury during validity period of the Policy, viz., one year, irrespective whether the insured renews or does not renew years. The exclusion clause 3(b) insurance cover for first two years of its continuous operation, is contrary to the professed has been promised to the insured at the time he accepted the contract of insurance. This is nothing less than deceit and practiced by the insurance in holding that the exclus of the contract, and defeats the same making it unenforceable right from its inception. Dealing with somewhat similar situation, it was held in Marketing Private Limited be severed from the Policy; the Court observed: 2019 -4- injury shall require the insured Person/s, upon th duly Qualified Physician/Medical Specialist or of duly Qualified Surgeon to incur Hospitalization expenses for medical/surgical treatment at any India as an in-patient, the Company will pay to the Person/s the amount of such expenses as are reasonably and necessarily incurred up-to the limits indicated but not exceeding the sum insured in aggregate in any one period stated in the schedule hereto. olicy was issued for one year, and there was no condition requiring that it had to be renewed every year, or for any particular number of years, to avail its benefits. Meaning thereby, all the benefits explicit terms, as extracted hereinbefore - payment any disease, illness or bodily injury during validity period of the Policy, viz., one year, irrespective the insured renews or does not renew The exclusion clause 3(b), which keeps out the disease in question from insurance cover for first two years of its continuous operation, is contrary to terms of the Policy itself. It steals away from back has been promised to the insured at the time he accepted the contract of insurance. This is nothing less than deceit and by the insurance company. Accordingly in holding that the exclusion clause 3(b) is in conflict with the main purpose of the contract, and defeats the same making it unenforceable right from its Dealing with somewhat similar situation, it was held in Marketing Private Limited case (supra) that such destructive clauses have to from the Policy; the Court observed: injury shall require the insured Person/s, upon the advice of a ed Physician/Medical Specialist/Medical Practitioner or of duly Qualified Surgeon to incur Hospitalization expenses for medical/surgical treatment at any Nursing Home Hospital in patient, the Company will pay to the Insured Person/s the amount of such expenses as are reasonably and to the limits indicated but not exceeding the sum insured in aggregate in any one period stated in the e was no condition requiring that it had to be renewed every year, or for any particular number of years, to avail its benefits. Meaning thereby, all the benefits declared to be admissible in payment for expenses incurred for any disease, illness or bodily injury - have to be made available during validity period of the Policy, viz., one year, irrespective of the fact the insured renews or does not renew the Policy for the subsequent , which keeps out the disease in question from insurance cover for first two years of its continuous operation, is contrary to steals away from back-door what has been promised to the insured at the time he accepted the contract of insurance. This is nothing less than deceit and cannot be permitted to be Accordingly, this Court has no hesitation ion clause 3(b) is in conflict with the main purpose of the contract, and defeats the same making it unenforceable right from its Dealing with somewhat similar situation, it was held in Texco that such destructive clauses have to from the Policy; the Court observed: e advice of a /Medical Practitioner or of duly Qualified Surgeon to incur Hospitalization expenses Hospital in Insured Person/s the amount of such expenses as are reasonably and to the limits indicated but not exceeding the sum insured in aggregate in any one period stated in the e was no condition requiring that it had to be renewed every year, or for any particular number of years, to avail in for have to be made available of the fact for the subsequent , which keeps out the disease in question from insurance cover for first two years of its continuous operation, is contrary to what has been promised to the insured at the time he accepted the contract of be this Court has no hesitation ion clause 3(b) is in conflict with the main purpose of the contract, and defeats the same making it unenforceable right from its Texco that such destructive clauses have to AMAN DUA 2026.07.24 17:18 I attest to the accuracy and authenticity of this judicial document CWP-24133-20 touchstone of the doctrine of reading down in the light of the underlining object and intendment of the contract. It understood to mean to be in conflict with the main purpose for which the contract is entered. A party, who relies upon it not be the one who committed an act of fraud misrepresentation, exclusion clause is introduced by it. Such a clause has to be understood on the prism of the main contract. The main contract once signed would eclipse the offending exclusion clause when it would otherwise be impossible to execute it. A clause or a limb, which has got no existence outside, as such, it exists and vanishes along with the contract, having no independent life of its own. It has got no ability to destroy its own creator i.e. the main contract. When it is destructive to the ma its though brought either inadvertently or consciously by the party who introduced it. The doctrine of waiver, acquiescence, approbate and reprobate, and estoppel would cer operation as considered by this Court in Murugesan 14 to 22 23. strikes off the offending clause being void ab initio, has to be pressed into s contract, and thus destroying it without even a need for adjudication, certainly has to be eschewed by the court. The very existence of such a clause having found to be totally illegal and detrimental to objective, requires an effacement in the form of declaration of its non 8. In the light of foregoing discussion and the law exclusion clause 3(b) has 2019 -5- 13. An exclusion clause has to be understood on the touchstone of the doctrine of reading down in the light of the underlining object and intendment of the contract. It understood to mean to be in conflict with the main purpose for which the contract is entered. A party, who relies upon it not be the one who committed an act of fraud misrepresentation, particularly when the contract along exclusion clause is introduced by it. Such a clause has to be understood on the prism of the main contract. The main contract once signed would eclipse the offending exclusion clause when it would otherwise be impossible to execute it. A clause or a limb, which has got no existence outside, as such, it exists and vanishes along with the contract, having no independent life of its own. It has got no ability to destroy its own creator i.e. the main contract. When it is destructive to the ma its inception, it has to be severed, though brought either inadvertently or consciously by the party who introduced it. The doctrine of waiver, acquiescence, approbate and reprobate, and estoppel would cer operation as considered by this Court in Murugesan. 14 to 22 xxx xxx xxx 23. In such a situation, the doctrine of "blue pencil" which strikes off the offending clause being void ab initio, has to be pressed into service. The said clause being repugnant to the main contract, and thus destroying it without even a need for adjudication, certainly has to be eschewed by the court. The very existence of such a clause having found to be totally illegal and detrimental to the execution of the main contract along with its objective, requires an effacement in the form of declaration of its non-existence, warranting a decision by the court accordingly In the light of foregoing discussion and the law clause 3(b) has to be severed from the contract, and it is so ordered 13. An exclusion clause has to be understood on the touchstone of the doctrine of reading down in the light of the underlining object and intendment of the contract. It can never be understood to mean to be in conflict with the main purpose for which the contract is entered. A party, who relies upon it, shall not be the one who committed an act of fraud, coercion or particularly when the contract along with the exclusion clause is introduced by it. Such a clause has to be understood on the prism of the main contract. The main contract once signed would eclipse the offending exclusion clause when it would otherwise be impossible to execute it. A clause or a term is a limb, which has got no existence outside, as such, it exists and vanishes along with the contract, having no independent life of its own. It has got no ability to destroy its own creator i.e. the main contract. When it is destructive to the main contract, right at inception, it has to be severed, being a conscious exclusion, though brought either inadvertently or consciously by the party who introduced it. The doctrine of waiver, acquiescence, approbate and reprobate, and estoppel would certainly come into operation as considered by this Court in Union of India v. N. In such a situation, the doctrine of "blue pencil" which strikes off the offending clause being void ab initio, has to be ervice. The said clause being repugnant to the main contract, and thus destroying it without even a need for adjudication, certainly has to be eschewed by the court. The very existence of such a clause having found to be totally illegal and the execution of the main contract along with its objective, requires an effacement in the form of declaration of its existence, warranting a decision by the court accordingly. In the light of foregoing discussion and the law laid down, to be severed from the contract, and it is so ordered 13. An exclusion clause has to be understood on the touchstone of the doctrine of reading down in the light of the can never be understood to mean to be in conflict with the main purpose for shall , coercion or with the exclusion clause is introduced by it. Such a clause has to be understood on the prism of the main contract. The main contract once signed would eclipse the offending exclusion clause when it a term is a limb, which has got no existence outside, as such, it exists and vanishes along with the contract, having no independent life of its own. It has got no ability to destroy its own creator i.e. the in contract, right at being a conscious exclusion, though brought either inadvertently or consciously by the party who introduced it. The doctrine of waiver, acquiescence, tainly come into N. In such a situation, the doctrine of "blue pencil" which strikes off the offending clause being void ab initio, has to be ervice. The said clause being repugnant to the main contract, and thus destroying it without even a need for adjudication, certainly has to be eschewed by the court. The very existence of such a clause having found to be totally illegal and the execution of the main contract along with its objective, requires an effacement in the form of declaration of its laid down, to be severed from the contract, and it is so ordered AMAN DUA 2026.07.24 17:18 I attest to the accuracy and authenticity of this judicial document CWP-24133-20 hereby. This makes the petitioner’s claim admissible, as already held by the Permanent Lok Adalat. 9. The petition, accordingly, stands dismissed. 16.07.2026 Ad 2019 -6- hereby. This makes the petitioner’s claim admissible, as already held by the Permanent Lok Adalat. The petition, accordingly, stands dismissed. Whether speaking/reasoned Whether reportable hereby. This makes the petitioner’s claim admissible, as already held by the The petition, accordingly, stands dismissed. (TRIBHUVAN DAHIYA) JUDGE Yes/No Yes/No hereby. This makes the petitioner’s claim admissible, as already held by the ) AMAN DUA 2026.07.24 17:18 I attest to the accuracy and authenticity of this judicial document