Right To Legal Representation Before Insurance Ombudsman Can't Be Denied At Adjudicatory Stage: Karnataka High Court

The Karnataka High Court has recently held that the Insurance Ombudsman cannot deny a complainant the option of engaging an advocate once the proceedings move beyond mediation and enter the adjudicatory stage under Rule 17 of the Insurance Ombudsman Rules, 2017.

The single-judge bench of Justice Sachin Shankar Magadum added that refusal to permit the representation by a lawyer once the proceedings before the Insurance Ombudsman enter the 'quasi-judicial' adjudicatory stage would prejudice the interests of 'vulnerable categories of claimants'.

“…policyholder may not necessarily be a person well-versed in law or procedure; he may be an illiterate villager, a widow who is a homemaker … or a lay consumer unfamiliar with the nuances of insurance contracts and medical documentation. To expect such a claimant to effectively present his or her case involving interpretation of policy terms, exclusions, medical records and causation, without the aid of professional assistance, would be wholly unrealistic and would, in effect, amount to denial of a meaningful opportunity of hearing”, the court held in the order dated March 27.

Though the Insurance Ombudsman argued that the authority or the insurer's representatives are not legally trained, and allowing lawyer representation for the claimant would disturb the parity between the parties, the single judge bench disagreed with the said argument.

“…The mere fact that the Ombudsman or the representatives of the insurer may not be legally trained cannot be a valid ground to deny a litigant the assistance of an advocate, particularly when the proceedings have entered the adjudicatory stage under Rule 17. Such a view not only runs contrary to the statutory framework but also militates against the principles of fairness and effective hearing”, the High Court underscored.

The plea was filed by 54-year-old M.V. Narasimha Prasad, hailing from Banashankari, who had availed a 'Family Health Optima' Insurance Plan in 2019. After undergoing a surgery for 'calculous cholecystitis' at a Chikkellur Hospital, the petitioner submitted a reimbursement claim with the insurer, which was denied. He then made a representation to the Insurance Ombudsman.

Alleging that the Ombudsman passed an order detrimental to the petitioner in violation of natural principles of justice, the petitioner approached the High Court. The court had then allowed the plea and remanded the matter back to the Ombudsman for fresh adjudication.

In the second stint of proceedings before the Ombudsman, the application filed by the complainant for engaging an advocate was denied. Aggrieved by the same, the petitioner/ complainant approached the High Court once again.

Further Observations

Section 30 of the Advocates Act, 1961 [statutory right of advocate to practice before any tribunal or authority empowered to take evidence] would be squarely applicable to quasi-judicial proceedings before the Ombudsman, the court clarified by relying on the Telangana High Court decision in N.Vijaya Laxmi vs. Insurance Regulatory and Development Authority of India and Others (2024).

The court reasoned that when the mediation contemplated under Rule 14-16 of the Insurance Ombudsman Rules, 2017 fails, the proceedings enter the realm of 'adjudication' whereby an 'award' should be passed by the Ombudsman based on 'pleadings and evidence' brought on record, as per Rule 17(1).

"…The requirement of considering pleadings and evidence, coupled with the obligation to assign reasons under sub-rule (2), unmistakably demonstrates that the Ombudsman, at that stage, discharges a quasi-judicial function. Therefore, the proceedings cannot be construed as being purely informal once the stage of adjudication is reached”, the single judge bench remarked.

Therefore, the court struck down the Ombudsman's intimation refusing legal representation. Additionally, the court instructed the Ombudsman to hear the complainant and dispose of the complaint within 90 days from the receipt of the certified order.

Accordingly, the writ petition was allowed, permitting the engagement of a lawyer by the Complainant before the Ombudsman. The complainant would be required not to seek unnecessary adjournments before the Ombudsman after the engagement of the lawyer, the court added in the order.

Case Title: Sri M.V. Narasimha Prasad v. Office of the Insurance Ombudsman (Karnataka)

Case No.: Writ Petition No. 26221 of 2024 (GM-RES)

Click Here To Read/ Download Order