State Consumer Disputes Redressal Commission
Shri Bansidhar Sharma vs The Branch Manager Lic on 30 November, 2013
Daily Order
First Appeal No. FA/3/2007 (Arisen out of Order Dated null in Case No. of District ) 1. Shri Bansidhar Sharma Shillong BEFORE: HON'BLE MR. JUSTICE P K Musahary PRESIDENT HON'BLE MR. Ramesh Bawri MEMBER PRESENT: Mr. S. P. Sharma, Advocate for the Appellant 1 Mr. S. Jindal, Advocate for the Respondent 1 ORDER
Shri Bansidhar Sharma
S/o Late Kanayalal Sharma
C/o Rani Hotel, Mawlong Hat,
Shillong-793002 ..... Appellant / Complainant
-Vs-
1.The Branch Manager LIC of India, Jeevan Jyoti JM Nichols Roy Road, Dhankheti, Shillong-793003
2. The Divisional Manager LIC of India, Jeevan Prakash SS Road, Guwahati-781001
3. The Chairman LIC of India, Mumbai-400021 .......Respondents / Opposite Parties Date of hearing: 09.11.2013 Date of judgment: 30.11.2013 Whether to be reported: Yes JUDGMENT & ORDER (CAV) Per Mr. Justice P. K. Musahary (Retd), President :
1. This is claimant's appeal against an order dated 15.12.2006 passed by the learned District Consumer Redressal Forum, East Khasi Hills District, Shillong (District Forum in short) dismissing his complaint being Consumer Case No. 28 of 2004.
2. We have heard Mr. S P Sharma, learned counsel for the appellant and Mr. S. Jindal, learned counsel for the respondents. We have also perused the pleadings along with the documents and written arguments filed by the parties.
3. The appellant's case is that his father Late Kanayalal Sharma, while residing at Shillong, purchased two insurance policies on his life being Policy No. 482585127 dated 16.10.2001 and Policy No. 483023940 dated 14.01.2003 assuring sum of Rs. 2 lakhs and Rs. 3 lakhs respectively and appointing him as the nominee. Appellant's father (insured) expired on 16.05.2003 during his visit to his native village Kyamsar in Nagaur district, Rajasthan. He obtained a death certificate on 05.06.2003 from the local village panchayat secretary and lodged claim on both the policies on 13.02.2004. His claims were repudiated by the opposite parties on 27.09.2004.
4. With regard to Policy No. 482585127, the learned District Forum on the basis of showcause reply and other relevant documents came to findings that the premium was to be paid in March and September every year with one month grace period. The last premium was paid on 23.10.2002 and the next premium was due on 28.03.2003 but it was not paid even within the one month grace period. Since the insured died on 16.05.2003, no claim was admissible against the said Policy which got admittedly lapsed due to non-payment of due premium. We cannot change or interfere with the findings arrived at by the learned District Forum unless the appellant can show non-consideration of any valid documents on record which led to the said findings.
5. As regards the Policy No. 483023940, there is no dispute over its subsistence or validity but the claim has been repudiated on account of alleged fraud perpetuated by the complainant and suppression of true age of the insured.
Since the insured died within three years of the commencement of the Policy, the opposite parties got the matter inquired through its officer and in such inquiry it was found that the insured died much before 16.05.2003. According to opposite parties, as many as six death certificates from different persons have been annexed to the claim petition but none of the signatories of the certificates stated that they have seen the dead body of the insured. The opposite parties also asserted that from the inquiry it was found that the insured, at the time of the proposal, stated his age as 60 years in 2002 calculated from his date of birth on 20.04.1942, whereas his daughter Smt. Pushpa, while taking a Policy in 1991, recorded her father's age as 67 years in 1991. It is, therefore, argued that the age of the insured should have been 78 years in 2002. Further, in the Voters List published in January 1998, the insured's age was shown as 78 years.
Furthermore, in the Voters List published in January 2003, the insured Kanayalal's name has been shown in the list of deleted voters, from which it could be presumed that he expired between January 1998 and January 2003 and not in May 2003 and for the same reason it stood proved that the insured Kanayalal Sharma was not 60 years old when he bought the Policy.
6. The opposite parties' case is that-
(1) Insured Kanayalal Sharma was not even alive when the proposal for life insurance was made; (2) insured Kanayalal Sharma expired much earlier than 16.05.2003 and (3) the insured and the deceased were two different persons and even the person presented before the doctor and insurance representative was somebody else.
7. A life insurance Policy, as we know, is opened through an agent who meets, interacts, pursues and then convinces the customer to buy the Policy.
Before giving effect to the insurance Policy signatures are obtained on a duly filled in prescribed form. The Policy is issued by the insurance company only when the proposer can meet the queries and completes the formalities. Going by the formalities observed before issuing the Policy, there is no scope for opening life insurance Policy of a dead person. If such a Policy is opened in the name of a dead person, the concerned agent of an insurance company would also be equally liable for the fraud committed in the matter. In such a case, the insured alone cannot be held liable for the fraud. The insurance company must disclose the action taken by it against the agent concerned for the fraud committed by him. The opposite parties have indicated nothing about the action taken against the agent.
The Commission is not to believe the allegation of the opposite parties that the insurance Policy in question was opened even when the insured was not alive.
The accepted position of law is that when insurance claim has been repudiated after proper investigation and application of mind, the allegation of deficiency of service becomes unacceptable. In the present case the opposite parties have claimed to have conducted proper investigation through a senior branch manager.
This fact is available from the written statement filed by the opposite parties. The said senior branch manager submitted his investigation report on 29.01.2004.
Copy of the said report is not laid or furnished along with the written statement for perusal of the Commission. However, the opposite parties in Para 8 (v) of the showcause have stated as under-
(v) "That the investigation report dated 28.06.2004 of Shri B. S. Pareek, branch manager Deedwana revealed that the deceased/assured was 85 years old or above at the time of submission of proposal form on 13.12.2002 and was possibly not alive. He was residing at Village Kyamsar for many years and had not even visited Shillong in the last 5-10 years. On an inquiry made by him from the staff of Tehsil who were engaged in preparation of Voters List, the job of review of Voters List starts in November every year and after addition and deletion the Voters Lists are published in January of following years. It implies that the deceased/assured died before November 2002 and subsequently his name was deleted in the Voters List dated 01.01.2003 published in 20.01.2003. Further the said Investigating Officer also came to know from one of the relatives of the deceased that he died before Deepawali (04.11.2002) i.e. before completion of the proposal on 13.12.2002."
8. From the above it appears that the senior branch manager collected some documents pertaining to proposal form of the insured and his daughter and also collected some Voters Lists of the locality in Rajasthan published on 05.01.98 and 01.01.2003 to show that the age shown in the insurance proposal does not tally with the age shown in the Voters List. The Voters List of deleted voters as published on 20.01.2003 was also brought on record to show that the insured died before 04.11.2002 i.e. before completion of the proposal on 13.12.2002. There is no disclosure in the written statement that the said Branch Manager, while conducting investigation met any persons/witnesses to verify the antecedents of the insured and to ascertain as to whether the insured died at his native place on 16.05.2003. There are, on record, as many as six death certificates issued by six different authorities including the one issued by local Sarpanch and the medical officer, but none of them was contacted by the investigating Branch Manager. In all the said death certificates, it is mentioned that the insured died on 16.05.2003.
Apparently the said investigating Branch Manager did not record the statements of any witnesses. There being no meeting with the concerned persons/witnesses and recording of their statements, the inquiry/investigation as conducted by the investigating branch manager cannot be said to be proper and in accordance with existing accepted procedure. There is no denial of the fact that the entire investigation was done behind the back of the complainant and the copy of the investigation report, purportedly made and submitted by the said officer, was never furnished to the complainant. The same has not been laid or filed before the learned District Forum for perusal and consideration.
9. That apart, the opposite parties have filed no evidence on affidavit of the senior branch manager concerned nor have they examined him as a witness to prove the fact that he conducted the investigation and submitted a report. In absence of such affidavit and evidence of the officer concerned, we find the stand of the opposite parties unacceptable and unbelievable. In this regard the learned counsel for the appellant relied on National Insurance Company Ltd Vs Munir Shah, reported in 2003 (1) CPR 122 (NC) wherein the Hon'ble National Commission held that the investigating officer's report, if not proved by an affidavit, cannot be a basis for repudiation of insurance claim. The said decision is applicable to the present case and it has to be followed by this Commission.
10. From record we find that the opposite parties filed photocopies of the Voters List without filing the originals as published in the official gazette. No officer from the election department was examined to prove that the photocopies as filed by the opposite parties were made from the original Voters List published by the government. Such photocopies of Voters List cannot be accepted in evidence unless it is duly compared with and authenticated by a competent officer of the concerned department. As against the above weak piece of documentary evidence, we may turn to oral evidence of CW2, Shri Hari Prasad Sharma, younger son of the insured, who categorically stated that his father was born on 20.04.1942. He denied the suggestion put during cross-examination that his father died prior to making the proposal for life insurance. That apart, in his evidence on affidavit, he stated that his father (insured) passed away on 16.05.2003 at their native village Kyamsar under Nagaur district in Rajasthan and the funeral and last rites took place at the said native village in presence of more than 100 villagers including the Village Sarpanch. The Sarpanch issued a death cum funeral certificate stating therein that his father (insured) died on 16.05.2003. The said certificate in original was filed, proved and marked as Ext 1. One independent witness, Shri Kamal Sharma was examined as CW3. He stated that he was born and brought up in Shillong. His father stayed at the native place in Rajasthan and they were neighbours of the insured. He saw the insured alive 3 or 4 days before his death. He went to Rajasthan in the month of April, 2003. He denied the suggestion put during cross-examination that the insured did not die on 16.05.2003. The evidence of CW3 lends support to the claimant's case.
11. What is found established in this case is that the insured, in both the insurance proposals, recorded his date of birth as 20.04.1942. After his death, when the claim was filed, the opposite parties questioned the correctness of the same and repudiated the claim alleging mis-statement and suppression of material information mainly because the insured's age as shown in the proposal does not tally with the age recorded in the Voters List. The opposite parties have overweighed and gave undue importance to the entry made in the Voters List to disbelieve the age recorded in the proposal. If such procedure or practice is allowed it would encourage the insurance companies to repudiate the claims easily at their whims on ground of alleged suppression of material information by collecting such documents on age. The Commission cannot allow such dangerous trend to grow. Besides, in our considered view all suppression of material information cannot result into repudiation of insurance claim unless the suppression is proved to be willful with ill intention. Nobody knows exactly when the end of life comes. In fact nobody desires to die early. An insured, by dying early does not personally derive any benefit. By his premature death, it rather benefits the nominee only. So, where is the question of willful suppression or misinformation about the date of birth or age of the insured in this case?
12. The opposite parties examined only one witness, namely Shri S. S. Thakur.
His evidence is that he was the Branch Manager of LIC Shillong on 8th He certified that LIC Shillong office issued two insurance policies in the name of Shri Kanayalal Sharma by Policy No. 482585127 and 483023940. There is no significance in this oral evidence. The opposite parties examined no other witness to establish their case or to demolish the evidence of the complainant. Except the presumption and surmises, based on some Voters List (not duly proved in accordance with law), there is no solid/cogent evidence on record proving the charge of committing fraud or suppressing material information that the insured died before the insurance Policy was opened or the insured was no longer alive at the time when the proposal was made. The opposite parties made no attempt to examine any witness from the native village of the insured, not to speak of examining the village Sarpanch.
June, 2006.
13. We are satisfied that the complainant has been able to prove the fact that the insured died in his native place on 16.05.2003 and his funeral and other rites were performed in presence of Sarpanch and co-villagers. We are, therefore, of the view that the learned District Forum failed to appreciate the evidence and materials on record and came to erroneous findings/conclusion resulting into dismissal of the complaint. We are not persuaded to agree with the findings of the learned District Forum. We are, rather, persuaded to disagree and set aside the impugned order dated 15.12.2006 as far as it relates to Policy No. 483023940 as unsustainable under the law. Consequently we hold and order as follows: -
(1) Repudiation of claim under LIC Policy No. 482585127 is valid and sustainable under law.
(2) Repudiation of claim under LIC Policy No. 483023940 is invalid and unsustainable under the law.
(3) The opposite parties shall pay to the Appellant the following:
(a) The assured sum of Rs. 3.00 (Three) lakhs with accrued bonus as applicable under the Policy No.483023940 along with interest on the total sum @ 12% p.a. from 16.11.2003 (i.e. 6 months from the death of the Insured) till the date of payment.
(b) A sum of Rs. 35,000/- as compensation and damages on account of mental agony and harassment.
(c) A sum of Rs. 10,000/- as litigation costs.
(d) The aforementioned amounts shall be paid within a period of 30 days from this date, failing which the entire sum shall carry further interest @ 12% p.a. till realization.
14. The appeal is thus allowed in part and disposed of with modification of the impugned order as indicated above. Return the records below immediately along with a copy of this judgment and order.
Per: Mr. Ramesh Bawri, Senior Member :
1. While I am respectfully and completely in agreement with the aforementioned findings, observations and directions issued by the Hon'ble President, with regard to Policy No. 483023940 I would like to add the following additional reasons for upholding the Appellant's claim:
(a) LIC has claimed that the Insured died between 5.1.1998 and 1.1.2003 and was perhaps not even alive on 13.12.02 when he made the proposal for his life insurance. This, in our view, is a preposterous proposition inasmuch as the proposal form filed before us by LIC itself shows that it was treated as a medical case and the Doctor who examined the Insured has himself clearly certified that -
"I certify that the Proposer has signed in my presence after admitting that all the answers to question No. 10 and onwards of the form have been correctly recorded."
(b) As the deceased insured was examined by the doctor of the insurance company and from his physical outlook the doctor must have assessed his approximate age. Had he been looking 82 years old, as claimed by LIC, instead of 60 the doctor would surely have noticed and opined that the insured was looking overaged as compared with the age mentioned in the proposal form. No doubt certain diseases cannot be ascertained even despite examinations and tests conducted by medical experts, but there are certain issues such as approximate age, physical appearance etc., which can clearly be observed by a medical expert on physical examination of the insured. A difference of 22 years could even be made out by a common man. For this reason too, LIC's contentions regarding the Insured's age cannot be accepted.
(c) The Policy document which shows the Insured's date of Birth as 20.4.1942 also reveals that his age has been admitted by LIC. It may be mentioned that in Policy No. 482585127 too the Insured's age has been admitted by LIC.
(d) LIC's case is mainly founded upon copies of some Voters Lists, both in respect of the Insured and of his purported relatives, as proof of the correct age of the Insured which, according to them, was around 82 and not 60 when he made the proposal. Now, age proof is accepted by LIC is the following manner only:
(A) Proofs of age, which are generally acceptable to the Corporation:
(1) Certified extract from Municipal or other records made at the time of birth.
(2) Certificate of Baptism or certified extract from family Bible if it contains age or date of birth.
(3) Certified extract from School or College if age or date of birth is stated therein.
(4) Certified extract from Service Register in case of Govt. employees and employees of Quasi-Govt. institutions including Public Limited Companies and Pass port issued by the Pass port Authorities in India.
(B) Alternative Age Proofs which are accepted:
(1) Marriage certificate in the case of Roman Catholics issued by Roman Catholic Church.
(2) Certified extracts from the Service Registers of Commercial Institutions or Industrial Undertakings provided it is specifically mentioned in such extracts that conclusive evidence of age was produced at the time of recruitment of the employee.
(3) Identity Cards issued by Defence Department.
(4) A true copy of the University Certificate or of Matriculation/Higher Secondary Education, S.S.L. Certificate issued by a Board set up by a State/ Central Government.
(5) Non- standard age proof like Horoscope, Service Record where age is not verified at the time of entry, E.S.I.S. Card, Marriage Certificate in case of Muslim Proposer, Elder's Declaration, Self-declaration and Certificate by Village Panchayats are accepted subject to certain rules.
It can thus be seen that LIC does not accept Voters Lists as Proof of age by the Insured. Hence, by the same yardstick, LIC too cannot use / rely upon a Voters List as Proof of Age to repudiate an Insured's claim, that too without proving it in accordance with law.
(e) The learned District Forum dismissed the Appellant's claim on the basis that he has failed to 'dispel the doubt raised (by LIC) in the matter through adducing relevant evidence'. We believe this was not the right approach as it was on LIC that the burden lay to prove material mis-statement, suppression or fraud on the part of the Insured, in order to repudiate the claim. The deceased life assured was the best person to explain / produce evidence as to his age, but he is no more in the world. Under such circumstances, a strict burden lay on the insurance company to prove that the deceased life assured had concealed or mis-
stated the material fact as regards his age. The complainant / legal heir of the deceased could at most help the insurance company in arriving at a correct conclusion, but in the absence of strict proof, the deceased life assured cannot be condemned on mere allegation that he had played a fraud with the insurance company.
2. With regard to the other Policy No. 482585127 which lapsed, we must remember that Section 50 of the Insurance Act reads as under:
"50. Notice of options available to the assured on the lapsing of a policy:-
An insurer shall, before the expiry of three months from the date on which the premiums in respect of a policy of life insurance were payable but not paid, give notice to the policy-holder informing him of the options available to him unless these are set forth in the policy."
In L.I.C. Of India vs Smt. Amarjit Kaur decided on 18.2.2003, the Hon'ble National Commission observed that "Even though the relevant clause is printed in the policy it is desirable that a notice as contemplated under Section 50 be given".
Further, only to demonstrate how lapsation of policies ought to be treated by an Insurer, we refer to Regulations 4 & 5 of The Insurance Regulatory & Development Authority (Standardization of terms & conditions of ULIP Products and treatment of lapsed policies) Regulations, 2010 which mandate as follows:
"4. Where policies lapse, the policy holder is entitled to one of the following options:-
a. to revive the policy;
b. to continue with the policy only to the extent of risk cover and c. to continue with the policy with risk cover and as part of the Fund;
d. to withdraw completely from the Fund without any risk cover.
5. In order to exercise the options available by a policy holder as mentioned in regulation 4 above, the insurance company shall take the following steps in all cases where a policy has lapsed:
a. A notice shall be issued to such a policy holder asking him/her to exercise the said options within a period of 30 days of receipt of such notice.
b. In case no option is exercised within 30 days, the option at regulation 4 (c) above, i.e, to continue in the Fund with risk cover will be deemed to have been exercised and the risk charges and fund management charge will be recovered."
We also deem it necessary to note here that the terms of a LIC Pension Plus Policy (not the type of policy with which we are concerned here) contains the following clause:
"If you fail to pay premiums under the Policy within the days of grace, a notice shall be sent to you within a period of fifteen days from the date of expiry of grace period to exercise one of the following options within a period of thirty days of receipt of such notice. (1) Revival of the Policy, or (2) Complete withdrawal from the Policy.
During the notice period of 30 days, the Policy shall be treated as in force till the date of discontinuance of the Policy (i.e. till the date on which the intimation is received from the Policyholder for complete withdrawal of the Policy or till the expiry of the notice period) and the charges shall be taken, as usual. If you do not exercise any option within the stipulated period of 30 days, you shall be deemed to have exercised the option of complete withdrawal from the Policy."
Although in the instant case, the options available to the assured on the lapsing of a policy have been set forth in the Policy and a notice was not mandatory nor are the Regulations cited above applicable, we are of the view that, in the interests of justice, LIC ought to follow the same salutary principles as aforementioned (and we see no reason why they should not ) in respect of all types of policies and send notices to a policy holder within a period of fifteen days from the date of expiry of grace period to exercise his option, either to revive the Policy or to completely withdraw from it, within a period of thirty days of receipt of such notice. Similarly, again in the interests of justice and fair play, LIC ought to have a mechanism of sending premium-due notices to all policy holders as a reminder, at least 15 days before the premium is due, in tune with the procedure followed by several other private Insurance companies. It cannot be forgotten that in the matter of lapsation of policies, a major reason for lapsed policies is the lack of communication between the insured and insurer after the sale of a policy. It is quite likely that an Insured may forget to pay his premium on time, leading his Policy to lapse for this simple reason and, eventually, in case of death, depriving his heirs / nominees from receiving the insured amount, much to their shock and dismay, thereby undermining the very purpose for which a Life Insurance Policy is taken, besides enriching the Insurance Co. by the amount of premiums collected.
SENIOR MEMBER PRESIDENT [HON'BLE MR. JUSTICE P K Musahary] PRESIDENT [HON'BLE MR. Ramesh Bawri] MEMBER