State Consumer Disputes Redressal Commission
The Divisional Manager, Lici vs Motimina Basfore on 31 July, 2009
State Consumer Disputes Redressal Commission State Consumer Disputes Redressal Commission West Bengal BHABANI BHAVAN (GROUND FLOOR) 31, BELVEDERE ROAD, ALIPORE KOLKATA 700 027 S.C. CASE NO. FA/08/325 DATE OF FILING: 21.8.2008 DATE OF FINAL ORDER: 31.07.2009 APPELLANTS/COMPLAINANTS 1) The Divisional Manager Life Insurance Corporation of India P.O. Jalpaiguri, P.S. Kotwali Dist. Jalpaiguri, W.B. 2) The Branch Manager Life Insurance Corporation of India Alipurduar Branch, P.O. Alipurduar Court P.S. Alipurduar, Dist. - Jalpaiguri RESPONDENT 1) Motimina Basfore W/o Rajendra Basfore Hospital More, P.O. & P.S. Alipurduar Dist. Jalpaiguri PROFORMA RESPONDENT 2) Sanjoy Roy Development Officer, LICI P.O. & P.S. Alipurduar, Dist. - Jalpaiguri 3) Sanjib Kundu Agency Code No.413045, LICI P.O. & P.S. Alipurduar Dist. - Jalpaiguri BEFORE : HONBLE JUSTICE MR. A. CHAKRABARTI, PRESIDENT MEMBER : SHRI A.K. RAY MEMBER : SMT. S. MAJUMDER FOR THE PETITIONER : Miss. S. Roychowdhury, Advocate FOR THE RESPONDENT : Sri P.K. Panja, Advocate Sri I.K. Jha, Advocate Sri A.K. Ray, Honble Member
The appeal arises out of the order dated 28.5.08 passed by the Dist. Forum, Alipurduar Circuit Bench of Jalpaiguri in case no.20 of 2005. The Complaint was allowed on contest with cost of Rs.1,000/-. OP nos.1&2 were directed to pay Rs.3 lakh to the Complainant along with interest @ 12% p.a. from 30.11.04 till realization & Rs.5,000/- for mental agony & harassment within 2 months from the date of the order & in default a penal interest @ 12% p.a. was also levied on the unpaid amount till realization.
2. The instant appeal has been preferred by the Appellant against the aforesaid order. The case in brief was that the deceased mother of the Complainant was an ex-sanitary cleaner. OP-4 induced her to take a policy under the LICI. She accordingly, deposited a sum of Rs.4,841/- with LICI & subsequently submitted the proposal form to LICI. The OPs who are Appellants before us did not however issue any policy certificate inspite of repeated demands. The mother of the Complainant, Chandrajyoti Basfore, fell ill and was admitted in hospital where she died on 16.9.2004. This was intimated to the OPs on 30.11.04. The Complainant was her nominee in respect of the said policy.
On 17.01.05 the OP no.2 repudiated the claim of Complainant stating that the deceased did not submit any income tax assessment order for the preceding 3 years. OP-3 & 4 had already taken her original pension book before issuing their letter dated 17.1.05. Hence, the case claiming payment of Rs.3 lakh with interest according to the terms & conditions of the policy.
3. OP Nos. 1&2 contested the case by filing W.V contending inter alia that the case was not maintainable in law & on facts. They stated that the amount of Rs.4,841/- was deposited by late Chandrajyoti Basfore, on 31.7.04 at the office of OP no.-2 & subsequently submitted a proposal.
The said proposal was forwarded to the office of OP no-1 for acceptance. The proposal was never accepted as the divisional office called for income tax return for 3 years but the proposer did not comply with the same & due to non-fulfillment of the requirement there was no previty of contract between the parties.
4. In their grounds for appeal the Appellants have further submitted that the deposit of Rs.4,841/- was not premium but it was the amount equivalent to the premium to be paid after acceptance of the policy for consideration of the proposal. The said deposit was kept in a suspense account in the name of the proposer without carrying any interest to be adjusted after acceptance of the proposer. The Forum thus failed to consider that due to non-submission of the requirement called for by the insurer there was no concluding contract & the policy could not be issued by the insurer.
Under a non-existing contract there could be no nomination & as such Respondent no-1 was not a nominee. In absence of a concluded contract Respondent no-1 or her mother could not demand policy certificate. The policy is issued only when the offer is accepted & communicated to the party in question. The Respondent No.-1 failed to produce any document showing that the offer had been accepted & the first premium receipt had been issued by the insurer.
5. The OP nos. 1&2 in their written argument filed before the Forum below stated amongst others that the proposer was an ex-sweeper designated as ex-sanitary cleaner posted at Alipurduar Junction.
She deposited an amount of Rs.4,841/- on 31.07.04 against receipt no 5599 for life coverage of Rs.3 lakh. As she was an ex-sweeper the LICI (Divisional Office) requested her to submit income tax return for the last 3 years, but the proposer did not comply with this requirement & as a result the proposal of insurance on the life of the deceased mother of the Complainant was not accepted. The aforesaid deposit did not make the corporation liable for acceptance of risk.
No cause of action arose after the death of the proposer as there was no liability for the risk & as such the Complainant as nominee had no right to claim the amount in question. There was no concluded valid Insurance Contract between the deceased & the LICI. Like other contracts, the contract of insurance should be completed by offer and acceptance as per provisions of Indian Contract Act. The Petitioner was however entitled to the amount deposited by the deceased, a sum of Rs.4,841/- being the proposal deposit.
6. The Forum below observed inter alia in its order that the ground of repudiation of the claim was that the deceased mother of the Complainant did not submit any income tax assessment return for the last 3 years though the original pension book was received. The OPs did not accept the proposal of insurance on the life as the proposer failed to comply with the requirement mentioned above & as such the amount deposited could not be called as premium. The Forum however observed that as the proposal deposit receipt was issued on receipt of the deposited amount, it should be considered as premium. The OP LICI could not repudiate the claim merely on the grounds of non-receipt of 3 years income tax return as it was not required. It was thus deficiency in service by not issuing the policy on demand and by not settling the claim in question. The complaint was accordingly allowed by the Forum below with certain directions.
7. Admittedly, late Chandrajyoti Basfore, mother of the Complainant paid the requisite amount of Rs.4,841/- for a policy at the office of OP No.2 (Branch Manager, LICI, Alipurduar Branch) She was an ex-sweeper at Alipurduar Junction. It is quite surprising that the divisional office of the LICI was interested in obtaining her 3 years income tax return. They did not ask for any other requirements. We have no idea that a sweeper who normally belonged to the lowest wrung of Govt. service would be required to file their income tax return every year. We consider non-acceptance of the proposal and non-issue of the policy to be deficiency in service on the part of OPs who are the Appellants before us. Accordingly, it is difficult for us to allow the appeal.
There is no scope for us to interfere with the impugned order of the Forum below. We however feel that the rate of interest is rather high and deserves to be reduced.
8. The demand of production of income tax return for 3 years from a sweeper is considered by us to be frivolous & beyond the scope of the concerned divisional office of the Appellants.
They did not ask for any other documents to consider the case of the proposer. Accordingly, the decisions referred to by the Appellant reported in 1(2009) CPJ 18 NC & (2005) 3SCC752 were not considered by us.
9. It is accordingly ordered that the appeal be allowed in part on contest without cost. The impugned order of the Forum below is affirmed with the modification that its order relating to payment of interest be reduced from 12% to 10% p.a. Other parts of the order shall remain intact. The impugned order of the Forum below should be complied with within 6 weeks from the date of communication of this order by the Appellants.
Member Member President I have perused the judgment prepared by Mr. A.K. Ray, the Ld. Member. I am unable to agree to the view taken by the Ld. Member for the reasons stated below. From the facts as discussed in the judgment of Mr. Ray, the Ld. Member, and from the records it is apparent that the deceased submitted a proposal form for obtaining a Life Insurance Policy and paid requisite amount of Rs.4,841/- equivalent to one premium. It is also found that the Insurer asked for filing the Income Tax Return for three years by the proposer since deceased. Therefore, it is apparent that LICI did not accept the proposal and contract of insurance was not complete at that stage. The complainant has not proved that the proposer since deceased either submitted the copies of the Income Tax Return for three years as was called upon or gave any reply expressing inability to file the same.
Therefore, when the matter was pending at that stage and was not yet finalized and no agreement was entered into, in my opinion there was no deficiency in service on the part of the LICI in repudiating the claim of the complainant.
On perusal of records it is found that the proposal was filed and money was deposited on 31.7.04 and the proposer expired on 16.9.04 and, therefore, time gap was not also long which could raise a presumption that proposal has been accepted. In such facts particularly in view of demand by the LICI for some documents and no reply thereto by the proposer before her expiry, we are of the opinion that there was no concluded contract of insurance. Mere payment of an amount equivalent to one premium along with proposal form, does not indicate conclusion of agreement even if the money is accepted and kept in the accounts of the Insurer. Law in this connection has been decided in the case of State of Nagaland-Vs-Lipok Ao reported in 2005(3) SCC 752, LICI-Vs-Raja Vasireddy Komalavalli Kamba reported in AIR 1984 SC 1014 and Elsa Tony Phillip-Vs-LICI reported in 2009(1) CPJ 18.
The law as decided in the case of LICI-Vs-Raja Vasireddy Komalavalli Kamba (Supra) is as follows:
13.
. 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. Acceptance must be signified by some act or acts agreed on by the parties or from which the law raises a presumption of acceptance. See in this connection the statement of law in Corpus Juris Secundum, Vol. XLIV page 986 wherein it has been stated as:-
The mere receipt and retention of premiums until after the death of applicant does not give rise to a contract, although the circumstances may be such that approval could be inferred from retention of the premium. The mere execution of the policy is not an acceptance; an acceptance, to be complete, must be communicated to the offerer, either directly, or by some definite act, such as placing the contract in the mail. The test is not intention alone. When the application so requires, the acceptance must be evidenced by the signature of one of the companys executive officers.
14. 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. The general rule is that the 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. Whether the final acceptance is that of the assured or insurers, however, depends simply on the way in which negotiations for an insurance have progressed. See in the connection statement of law in MacGillivray & Parkington on Insurance Law, Seventh Edition page 94 paragraph 215.
In view of the above facts and law I am of the opinion that there was no deficiency in service on the part of LICI in repudiating the claim against the said alleged contract of insurance.
Therefore, the appeal is allowed.
The impugned judgment is set aside and the complaint is dismissed. There will be no order as to costs.
(Justice A. Chakrabarti) PRESIDENT I agree with the view taken by the Honble President.
(S. MAJUMDER) MEMBER(L)