National Consumer Disputes Redressal
Asha Devi vs Life Insurance Corporation Ltd. on 7 December, 2017
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 1056 OF 2008 (Against the Order dated 17/12/2007 in Appeal No. 2893/2001 of the State Commission Haryana) 1. ASHA DEVI WD/O LATE SHRI SEWA RAM 15/4, JACOMPURA GURGAON ...........Petitioner(s) Versus 1. LIFE INSURANCE CORPORATION LTD. SENIOR DIVISIONAL MANAGER, DIVISIONAL OFFICE, SECTOR - 17, PANCHKULA ...........Respondent(s)
BEFORE: HON'BLE MR. DR. B.C. GUPTA,PRESIDING MEMBER HON'BLE MR. DR. S.M. KANTIKAR,MEMBER
For the Petitioner : For the Respondent :
Dated : 07 Dec 2017 ORDER
APPEARED AT THE TIME OF ARGUMENTS
For the Petitioner
:
Mr. Aakash Aggarwal, Advocate
For the Respondent
:
Mr. Nikhil Jain, Advocate
PRONOUNCED ON : 07.12. 2017
O R D E R
PER DR. B.C. GUPTA, MEMBER This revision petition has been filed under section 21(b) of the Consumer Protection Act, 1986 against the impugned order dated 17.12.2007, passed by the Haryana State Consumer Disputes Redressal Commission (hereinafter referred to as 'the State Commission') in First Appeal No. 2893/2001, "Life Insurance Corporation of India versus Asha Devi", vide which, while allowing the said appeal, the order dated 29.05.2001, passed by the District Forum Rohtak in consumer complaint No. 470/98, filed by the present petitioner, allowing the said complaint, was set aside, and the complaint was ordered to be dismissed.
2. Briefly stated, the facts of the case as stated in the consumer complaint are that the late Sewa Ram Saini, husband of the petitioner/complainant Asha Devi, during his life time, decided to get his life assured for a total sum of ₹3 lakh with the opposite party (OP), the Life Insurance Corporation of India (LIC) and at the insistence of an agent of the LIC, named, Ashok Kumar Saini, he made applications for obtaining six different policies for ₹50,000/- each, total amounting to ₹3 lakh. He deposited a sum of ₹1051/- each for three policies on 22.06.1998 and another sum of ₹1051/- each for the rest of the three policies on 23.06.1998, with the Life Insurance Corporation of India and sent the proposal forms for obtaining the policies. He was subjected to medical examination by a Doctor deputed by LIC. However, before the said policies could be issued by the LIC, Sewa Ram Saini died on 11.07.1998, i.e., only within a few days of submitting the proposal forms, at the age of 37 years only. The complainant being the wife and nominee of the deceased informed the LIC about his death on 05.08.1998. She received letter dated 13.08.1998 from the LIC, saying that her husband had died before the conclusion of valid contract between the parties. The complainant filed the consumer complaint in question, seeking directions to the LIC to pay the amount of ₹3 lakh to her, saying that her husband had been insured by the LIC for the said amount.
3. The complaint was resisted by the OP LIC by filing a wrong reply before the District Forum, in which they stated that the proposal submitted by the husband of the deceased for the issuance of the policies in question, had not been accepted till his death and hence, there was no concluded contract between the parties and thus, the LIC was not liable to pay the amount in question. The LIC had requested the complainant to send the discharge slips duly signed, so that the amount deposited by the deceased with them could be released in her favour. The LIC stated that the acceptance of the proposal by the LIC had taken time, because the medical reports etc. in respect of the husband of the complainant were to be evaluated at the level of their controlling office and not the branch office, as the amount involved was large. Before the first premium receipt-cum-acceptance could be sent, the applicant had died.
4. The District Forum, after considering the averments of the parties, allowed the consumer complaint vide their order dated 20.05.2001 and directed the LIC to pay a sum of ₹3 lakh to the complainant alongwith interest @12% p.a. with effect from 04.11.1998 till realisation. Being aggrieved against the said order of the District Forum, the LIC filed an appeal before the State Commission, which was accepted by them vide the impugned order. Being aggrieved against the order of the State Commission, the petitioner/complainant is before this Commission by way of the present revision petition.
5. During arguments, it was contended by the learned counsel for the petitioner that since the amount of premium paid by the deceased had been accepted by the LIC, there was a concluded contract between the parties and hence, the LIC was liable to pay the amount in question as rightly ordered by the District Forum. The learned counsel stated that even after the deceased husband had died just a few days after the submission of the proposal forms, the LIC was liable to pay the amount, because the non-issuance of policy documents amounted to negligence on their part. The learned counsel has drawn attention to section 8 of the Indian Contract Act, which states as follows:-
"8. Acceptance by performing conditions, or receiving consideration.--Performance of the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal, is an acceptance of the proposal."
6. The learned counsel argued that since the LIC had accepted the money deposited by the deceased, it amounted to acceptance of the offer and hence, there was a concluded contract between the parties. The learned counsel further argued that the State Commission had wrongly placed reliance on the order passed by the Hon'ble Supreme Court in "Life Insurance Corporation of India versus Raja Vasireddy Kamalavalli Kamba & Ors. [AIR 1984 Supreme Court 1014]". He has drawn attention to an order passed by the Hon'ble Delhi High Court in "Life Insurance Corporation of India versus Anita Rani & Ors." [RSA No. 164/2004 & CM No. 8584/2004 decided on 11.03.2011], saying that the acceptance of any consideration, tantamounts to an acceptance of the proposal. The learned counsel has further drawn attention to an order passed by this Commission on 27.11.2012 in RP No. 2613/2012, "Life Insurance Corporation of India versus C.P. Sinha", in which a view had been taken that the insurance cover starts, the moment the cheque is accepted. The learned counsel has also drawn attention to the Insurance Regulatory Development Authority (IRDA) Regulations 2002, saying that the risk cover starts, the moment the premium is received. The order passed by the District Forum was therefore, in accordance with law and should be restored and that of the State Commission should be set aside. The learned counsel for the petitioner has also filed his written submissions, containing the arguments advanced at the time of the oral hearing.
7. Per contra, the learned counsel for the OP LIC stated that the impugned order passed by the State Commission was in accordance with law and should be upheld. After the submission of proposal forms by the deceased, there had been no acceptance on the part of the LIC and no policy had been issued in favour of the applicant. The learned counsel stated that the State Commission had rightly relied upon the judgment of the Hon'ble Supreme Court in the case, "Life Insurance Corporation of India versus Raja Vasireddy Kamalavalli Kamba & Ors." (supra). The learned counsel has also drawn attention to an order dated 13.08.2008 passed by this Commission in FA No. 243/1999 in "Elsa Tony Phillip vs Life Insurance Corporation of India", in which a view had been taken that mere encashment of a cheque was not enough to conclude that a contract came into existence between the parties. Referring to the guidelines issued by the IRDA, the learned counsel has drawn attention to an order dated 03.02.2017, passed by this Commission in FA No. 560/2012, "SBI Life Insurance Co. Ltd. vs D. Srinivas & Ors." by majority judgment, in which it was held that the non-compliance of period of 15 days for processing the applications on behalf of the LIC, does not amount to acceptance of the contract.
8. We have examined the entire material on record and given a thoughtful consideration to the arguments advanced before us.
9. As per the facts admitted on record, the policies in question had not been issued by the OP LIC, neither the acceptance of the proposal had been conveyed to the applicant before his death. It is also admitted that a sum of ₹1051/- had been paid by the applicant for each policy proposal at the time of submission of the necessary forms. The only issue that requires consideration is whether the payment of the said money, amounted to an acceptance of the contract on behalf of the LIC or not. The State Commission has relied upon an order passed by the Hon'ble Supreme Court in "Life Insurance Corporation of India versus Raja Vasireddy Kamalavalli Kamba & Ors." (supra) wherein it was held as under:-
"A contract of insurance will be concluded only when the party to whom an offer has been made accepts it unconditionally and communicates his acceptance to the person making the offer. Though in certain human relationships, silence to a proposal might convey acceptance but in the case of insurance proposal, silence does not denote consent and no binding contract arises until the person to whom an offer is made says or does something to signify his acceptance. Mere delay in giving an answer cannot be construed as an acceptance, as, prima facie, acceptance must be communicated to the offeror. Similarly the mere receipt and retention of premium until after the death of the applicant or the mere preparation of the policy document is not acceptance."
10. The facts and circumstances of the case bring out that medical examination was conducted on the husband of the complainant at the time of submitting the proposal form. According to the LIC, the medical reports were in the process of being evaluated by their Divisional Office, when the husband of the complainant died. It is made out from these facts that there was no acceptance of the proposal in any form on the part of the LIC when the applicant died on 11.07.98. The State Commission have also observed that the amount of ₹1,051/- in respect of each policy was received under the proposal "deposited receipts", and not as a part of the premium for the proposal submitted. The LIC have also stated that the first premium receipt-cum-acceptance letter had not been sent by them to the applicant. We, therefore, have no reason to disagree with the conclusion of the State Commission that the mere acceptance of a certain amount from the applicant, does not amount to a concluded contract between the parties.
11. The petitioner have tried to place reliance on section 8 of the Indian Contract Act saying that the acceptance of any consideration for a reciprocal promise amounts to an acceptance of the proposal. The said provision, however, does not help the petitioner at all because there is no acceptance of the proposal by the LIC in any form. As held by the Hon'ble Apex Court in "Life Insurance Corporation of India versus Raja Vasireddy Kamalavalli Kamba & Ors." (supra), a contract of insurance gets concluded only when the parties to whom an offer has been made accepts it unconditionally and communicates its acceptance to the person making the offer. It has further been stated that in case of insurance proposal, even silence on the part of the other party does not denote consent and no binding contract arises. It is made out, therefore, that there was no question of any concluded contract between the parties in the matter.
12. The matter has been considered in detail by this Commission in the order dated 03.02.2017, passed in FA No. 560/2012, "SBI Life Insurance Co. Ltd. vs D. Srinivas & Ors." (supra). It has been brought out in the said order that the acceptance of premium by the insurance Company before the mandatory medical examination, would not amount to unfair trade practice under the provisions of the Consumer Protection Act, 1986. In the said order, the applicability of the IRDA Regulations was also discussed and it was concluded that the non-compliance of 15 days' period for processing of the proposal by an insurance company will not come in the way of the said company repudiating the insurance claim. In so far as the order passed by the Hon'ble Delhi High Court in "Life Insurance Corporation of India versus Anita Rani & Ors." (supra) is concerned, it has been stated therein as follows:-
"18. A co-joint reading of these statutory provisions shows that the acceptance must be absolute and unqualified; it may be expressed in some usual and reasonable manner unless the proposal prescribes the manner in which it is to be accepted. Performance of a condition of the proposal or the acceptance of any consideration also tantamounts to an acceptance."
13. It has been held by the Hon'ble Delhi High Court that the acceptance must be absolute and unqualified and it may be expressed in some usual and reasonable manner. It is further held that the performance of a condition of the proposal or the acceptance of any consideration also tantamount to an acceptance. In our opinion, the view taken in this case does not help the petitioner, because in the present case, the matter was under consideration of the competent authority of the LIC, as to whether the proposal should be accepted or not. The mere acceptance of a part amount does not amount to acceptance of the proposal.
14. Considering the entire facts and circumstances of the case, therefore, we find that there is no ground to agree to the contention raised by the petitioner and impugned order passed by the State Commission is based on logical reasoning and correct analysis of the facts of the case. This revision petition is, therefore, ordered to be rejected and the order passed by the State Commission upheld. There shall be no order as to costs.
...................... DR. B.C. GUPTA PRESIDING MEMBER ...................... DR. S.M. KANTIKAR MEMBER