Karnataka High Court
P Dilip Kumar vs Life Insurance Corporation Of India on 22 November, 2013
Bench: K.L.Manjunath, A.V.Chandrashekara
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R
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 22nd DAY OF NOVEMBER 2013
PRESENT
THE HON'BLE MR. JUSTICE K.L.MANJUNATH
AND
THE HON'BLE MR. JUSTICE A.V.CHANDRASHEKARA
R.F.A. NO.53/2005
BETWEEN :
P.Dilip Kumar,
S/o.Late Shah Pukraj,
Aged about 38 years,
R/o.Shah Pulchand
Pukraj Jewellers,
Gandhi Bazar - 577 201
Shimoga. ...APPELLANT
(By Sri.V.P.Kulkarni, Adv.)
AND :
1. Life Insurance Corporation
Of India, represented by its
Senior Branch Manager,
LIC of India, Branch Unit I
Kote Road, Shimoga - 577 201.
2. Senior Divisional Manager,
LIC of India, Divisional Office,
Ajjarakad, Udupi - 576 101. ...RESPONDENTS
(By Sri.S.M.Dayanand Patil, Adv. for R1
and R2 served)
. . . .
This R.F.A is filed under Section 96 of CPC,
against the Judgment and Decree dated 25.08.2004
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passed in O.S.255/1997 on the file of the Principal Civil
Judge (Sr.Dn.) & C.J.M., Shimoga, dismissing the suit
for recovery of money.
This R.F.A. having been heard and reserved for
judgment, coming on for pronouncement of orders, this
day, A.V.Chandrashekara. J., delivered the following:
JUDGMENT
Being aggrieved by the considered judgment and decree of dismissal passed in O.S.255/1997 which was pending on the file of the Court of Principal Civil Judge (Sr.Dn.), Shimoga, present appeal is filed under Section 96 of CPC.
2. Appellant was the plaintiff and respondent was the defendant in the said suit.
3. Parties will be referred to plaintiff and defendant as per their status in the Trial Court.
4. Smt.Basanthi Kumari D Jain, who was the legally wedded wife of the plaintiff had taken an insurance policy bearing No.620802989 in her name. The sum assured was Rs.3 Lakhs and the yearly premium was Rs.11,413/-. Plaintiff had been named as -3- a nominee in her insurance policy. A proposal for the policy was made on 9.7.1994 by the plaintiff by indicating the date of the commencement of the risk from 28.5.1994. Smt. Lakshmi. D Padiyar was the L.I.C agent, who canvassed for the policy. Along with the proposal, a sum of Rs.11,413/- was given to the defendant and a premium receipt was issued to that effect on 28.7.1994. A valid insurance policy was issued by the Senior Manager of L.I.C., Branch Office, Shimoga on 19.8.1994 incorporating the special condition vide clause No.4B.
5. The proponent-insured, who was the mother of three children died on 18.1.1996 in Nanjappa Hospital, Shimoga. After her death, the plaintiff being the nominee under the above policy made a claim for the amount assured in the policy. Inspite of lapse of 1½ years, the defendant did not settle the claim and hence he got issued a notice on 19.6.1997 to the Divisional Commissioner, LIC, Udupi calling upon to settle the amount assured lest he would be forced to initiate proceedings in the Court of law. The Divisional Manager -4- replied in writing on 27.6.1997 requesting him to wait for some time, since they were waiting for some information from outside the office.
6. Later on, the defendant intimated the plaintiff that the entire amount of Rs.3 Lakhs assured vide policy No.620802989 could not be given as the insured died within three years from the date of the commencement of the risk, by committing suicide. This, according to the LIC, was in accordance with the prohibitive clause 4B inserted in the policy. Hence, a sum of Rs.22,226/- paid as premium on two occasions was returned to the plaintiff. The intimation to this effect was given in writing by the Divisional Office, Udupi vide letter dated 27.8.1997.
7. According to the plaintiff, the repudiation of the claim for entire assured amount of Rs.3 Lakhs by the defendant was not justified either in law or on facts, moreso, when the policy had been obtained by the insured for the future benefit of her children and for her future. The rejection of the claim of the plaintiff was in -5- breach of contractual liability, was the pleading. Hence, a suit was filed by the plaintiff-nominee on 20.10.1997 claiming in all a sum of Rs.3,38,157/- which was inclusive of the sum assured, interest thereon, accrued bonus minus Rs.22,226/- being received by the plaintiff in respect of two premiums paid to LIC.
8. Defendant chose to file written statement through Sri.B.S.Adiga, Manager (Legal & HPF) LIC, Udupi Division on 7.3.1998 denying the material allegations with an averment that the repudiation of the claim was unjust and contrary to the agreement. It was specifically pleaded before the Trial Court that rejection of the claim was perfectly justified as the insured died by committing suicide within three years from the date of the commencement of the risk and this was in terms of clause No. 4B attached to the policy of Insurance.
9. According to the defendant, the policy had been issued imposing clause B as the insured had no sufficient income of her. It was further pleaded that in the fourth page of the policy, there was a note to the -6- effect that the policy holder was requested to examine the policy and if not aggreable, to return it immediately for correction. If the insured had any objection to the imposition of Clause-B in the policy, she could very well have pointed out this and returned the policy. As the repudiation of the clause of the plaintiff was proper and legal, it had been prayed to dismiss the suit with costs. After perusing the pleadings following issues came to be framed on 01/09/2001:-
a) Whether the plaintiff proves that the proponent Late Smt. Basanthi Kumari D. Jain was not bound by Clause No. 4B - restrictive clause, in respect of her Policy No. 620802989?
b) Whether defendants prove that by virtue of restrictive clause - Clause No. 4B, their contractual liability under Policy No. 620892989 is limited to refund of premiums only (excluding extra premium received)?
c) Whether the plaintiff proves that he is entitled for a decree for sum assured, Bonus and interest as claimed in this suit?-7-
d) Whether the defendants prove that their liability under Policy No. 629892989 has been fully discharged?
e) For what decree or order?
10. In support of his case, plaintiff came to be examined as PW-1 and has got marked 19 exhibits. Sri. Venugopal, the Administrative Officer, L.I.C. Shimoga Branch came to be examined as DW 1 and has got marked in all 25 documents. After hearing the arguments, the learned Principal Senior Civil Judge has answer the issues Nos.1 and 3 in the negative and issue Nos.2 and 4 in the affirmative. Ultimately, the suit is dismissed in its entirety by ordering both the parties to bear their respective costs vide considered judgment and decree dated 25.08.2004. It is this judgment and decree which is called in question on various grounds as set out in the appeal memo filed U/S 96 of CPC before this Court. They are as follows:-
a) The trial Court has improperly come to the conclusion that the insured had given her consent to restrictive Clause-B in the agreement.-8-
b) The trial Court has failed to note that at the time of issuing the policy, the L.I.C. neither whispered about Clause-B nor explained the consequences of such insertion.
c) The trial Court has wrongly come to the conclusion that Clause-B chit was an integral part of the policy issued to the proponent and thereby has absolved the L.I.C. of its liability .
d) The trial Court has missed to examine an important aspect that as per the circular issued by the very L.I.C. to its Senior Managers, Clause-B should be inserted only after taking the consent of the insured and has further failed to note that the defendant has failed to discharge the heavy burden cast upon it to prove the insertion of Clause-B by tagging separate chit, only after taking her consent.
e) That the L.I.C. did not produce any document in respect of this vital aspect of explaining the consequences of insertion of Clause 4B and taking her consent only thereafter and as such the affirmative finding on issues 2 and 4 are wholly insufficient and improper.
f) The judgment and decree of the trail Court is stated to be opposed to law, facts and -9- probabilities and that the order and documentary evidence have not been evaluated or appreciated in right perspective and as such grave injustice has been caused.
g) Material admissions called out from the mouth of DW-1 have been ignored and that unnecessary presumption about the proof of consent to Clause 4B has been drawn against the plaintiff that too by not examining the person who actually canvassed for the policy.
11. We have heard the arguments from the learned counsel appearing for the parties at length.
12. Learned counsel for the appellant while elaborating the grounds urged in the appeal memo has vehemently argued that the best person to have explained the effect of Clause-4B has not been examined and withholding such a person is fatal to the case of the defendant. It is further contended that Clause-B was never an integral part of the insurance policy issued by the defendant. Hence, he has prayed for allowing the suit in its entirety. On the other hand, learned counsel the respondent-defendant has
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supported the impugned judgment contending that the trial court has properly appreciated the evidence in right perspective that overwhelming evidence is placed on record about imposition of Clause-4B not only in the policy but also in the sheet tagged on to the policy. According to him presumption of acceptance of Clause 4B is available as the insured was an educated lady. Hence he has prayed for dismissal of the appeal. After going through the appeal memo, evidence placed on record and the contentions raised before this Court, we are of the opinion that following points are relevant for disposal of this appeal:-
(1) Whether the defendant had explained the consequences of Clause 4B and then only had obtained the consent of the insured at the time of obtaining the proposal from the deceased?
(2) Whether Ex D3(a) had been appended to Ex.D2 by L.I.C. and thereby had made Ex.D2 an integral part of the L.I.C. policy issued vide Ex.
D2 ?
(3) Whether the judgment of the trial Court requires any interference and if so to what extent ?
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(4) To what reliefs and decree the parties are entitled for ?.
Points 1 & 2
13. Both these points are interrelated as explanation about insertion of Clause 4B to the deceased and tagging Ex D3(a) to Ex D2 appear to be simultaneous. These two points overlap on each other. Finding on point No.1 or point No 2. has bearing inter se. Hence points 1 and 2 are taken up together for common discussion.
14. The deceased Basanthi Kumari D. Jain had made a proposal to get an Insurance Policy for a sum of Rs.3,00,000/- with plan if 14-25 years. Ex.P1 is the proposal submitted by the deceased - proponent on 09.07.1994 to the LIC Branch. One Smt.Laxmi D.Padeyar has attested her signature as a witness and she was and LIC agent bearing Code No.2985625. The said witness was a resident of Shimoga City, working as an agent of LIC of India Unit No.1 at Shimoga. Plaintiff had been proposed as her nominee in Ex.P1 in the
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proposal form. In page 2 of Ex.P1, her occupation had been mentioned as Partner and Salesman in M/s. Laxmi Jewellers and Partner in M/s. Phool Chand Pukraj. She had studied up to 9th Standard and she had shown her income as Rs.50,000/- per annum. The source of income had been shown as Business (Jewellery) and employment. By the time she made a proposal for the policy in an assured sum of Rs.3,00,000/- vide Ex.P1 her husband i.e., plaintiff had already obtained five LIC policies from Shimoga Branch and the number of the policies and the sum assured are found in 3rd page of Ex.P1. The deceased wanted the policy to be dated back to 28.05.1994.
15. Ex.P2 is the receipt for having received a sum of Rs.11,413/- i.e., first premium from the deceased towards the proposal submitted by her. In Ex.P2, the policy clause is mentioned as 4B in colour pencil though other informations are typed. The proposal submitted vide Ex.P1 was accepted and a Regular policy was issued vide Ex.D2 by the then Senior Manager of LIC, Shimoga Branch. Ex.D3 is the office copy of Ex.D2
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retained by the LIC branch at Shimoga and Ex.D3(a) is the typed copy of clause 4B which a restrictive clause. According to the defendant, a similar copy of Ex.D3(a) duly signed by the then Senior Manager of LIC, Shimoga Branch had been appended to Ex.D2 and the restrictive clause had been explained to the policy holder before obtaining her consent.
16. It is relevant to peruse Ex.P18 & Ex.P19. Ex.P18 is a letter 28.07.1995 addressed by the Zonal Office of LIC at Hyderabad to all the Senior Divisional Managers under the South Central Zone, Hyderabad regarding Imposition of Clause 4B. For better appreciation of the facts of the case, the contents of Ex.P18 dated 28.07.1995 are reproduced as under:
"We have been receiving enquiries from some of our Divisions regarding imposition of Clause 4 B in case of female lives. We would like to make the position clear about the imposition of Clause 4B as under5:
Women falling under Category I, by virtue of employment in recognized Institutions are treated on par with male lives. As such imposition of C1.4B does not
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arise in this category of female lives. Likewise, women from Professions such as Doctors, Lawyers, Chartered Accountants, Architects and Career Lady Agents of LIC also fall under the above category.
Women with unearned income attracting income tax or with sizeable personal properties, investments,
yielding(sic.) income attracting income tax fall under Cat6egory II. It is to be noted that Clause 4B could be imposed in case of Category II female lives, whose age at entry is 35 years or less at the discretion of the underwriter if on the basis of date available, the underwriter reaches the considered conclusion that it is necessary to impose the restriction. In all such cases, while giving the decision, the underwriter should clearly state that Clause 4B is being imposed even though the proponent comes under Category II. Consent from the proponent is necessary.
However, it is to be noted that every precaution should be taken to ensure that this restriction is imposed, when it is felt that it is absolutely necessary.
All women who do not fall under Category I or II would come under Category III. In all these cases, Clause 4B should be
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imposed on lives aged 35 and below nearer birthday on the date of proposal. In the case of self employed women, such as Tailors, Petty Shop-keepers, Vegetable vendors, Milk- maid, Agricultural Coolies, etc., Clause 4B need not be imposed if the sum assured (including previous insurance under all permissible plans) is Rs.25,000/- or less Clause 4B need not be imposed in case of all minor female lives.
We hope, our offices will take utmost care while underwriting proposals on female lives and impose Clause 4(B) whenever necessary."
17. Ex.P19 is based on Ex.P18 and is dated 28.08.1995. It is identical to Ex.P18 and Ex.P19 was circulated reiterating the contents of Ex.P18.
18. Admittedly, the insured - proponent does not come under category I. There is nothing on record to show that she had unearned income attracting income tax or with sizeable personal properties, investments yielding income attracting income tax. Admittedly, she was below 35 years at the time of making a proposal to secure an insurance policy. Though she had mentioned
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her annual income as Rs.50,000/-, there is nothing on record to substantiate the same. On the other hand a Certificate issued by the Chartered Accountant of her husband, on 20.10.1994 discloses that the annual income during the financial years 1991-92, 1992-93 and 1993-94 was Rs.16,940/- Rs.29,100 and Rs.32,400/- respectively. In fact P.W.1 has admitted about the Certificate so issued by Srikantha Pai vide Ex.D17. On obtaining this Certificate from P.W.1 or his wife, the Insurance authorities chose to mention clause 4B in Ex.P2 the premium receipt dated 28.07.1994.
19. What is mentioned in Ex.P18, the circular issued by the Zonal office at Hyderabad addressed to all the Senior Managers is that such of those ladies whose age is below 35 years and who do not have income attracting income tax or do not have any sizeable properties could be bound by clause 4B. But before inserting clause 4B, the consent of the proponent was absolutely necessary. It is further made clear that every precaution must be taken to ensure that this restriction under clause 4B should be imposed only when it is felt
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that such an imposition is absolutely necessarily. There is nothing on record to show that the LIC authorities had used the discretion so vested in them to impose restrictive clause 4B. Even if one were to come to the conclusion that the Insurance Authorities had used their discretion before inserting clause 4B we have to see whether the consent of the proponent or the insured was really taken.
20. As already discussed, Ex.P1 is the proposal form submitted by deceased Basanthi Kumari Jain. Smt.Laxmi D.Padeyar is a witness to the said proposal and the form is filled up her and not by the deceased. She is none other than the LIC agent of the LIC of India, Unit No.1, Shimoga. Hence, it can be said that Smt.Laxmi D.Padeyar had canvassed for the proposal and hence, her signature finds a place in Ex.P2. The person who has been examined on behalf of the defendants is the then Assistant Administrative Officer of LIC, Unit No.1, Shimoga Branch. He did not have any personal knowledge about the efforts made by the LIC Authorities through the agent for canvassing to sell
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insurance policy. He has testified only on the basis of the records available in the office. The best person who could have spoken about the aspect of obtaining consent from the deceased was Smt.Laxmi D.Padeyar and she has not been examined. Therefore, much credence cannot be attached to the proposition of D.W.1, who was the Assistant Administrative Officer of the LIC, Shimoga Branch at that point of time.
21. In fact D.W.1 has admitted in his evidence that clause 4B is written in pencil in the policy clause of Ex.P2 and that there is no explanation about clause 4B in Ex.P2. What is deposed by him is that there was no necessity to have sent a separate appendage explaining Clause 4B as she had given consent. The exact deposition of D.W.1 is in Kannada and the same is translated to English and reproduced as under:
"It is true that policy clause 4-B is written in pencil. It is true that there is no explanation in Ex.P2 about clause-B. There was no occasion to send clause 4-B separately since Basanth Kumari had given her consent in Ex.P1 proposal."
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22. On going through this relevant piece of evidence of D.W.1, it is evident that they were mandatorily expected to obtain the consent of the insured - proponent in respect of the restrictive clause 4B and the same is not forthcoming. In the light of not obtaining consent, imposition of Clause-B separately and not making an integral part is nothing but an insertion behind the back of the insured-proponent.
23. In the case of The United India Insurance Company Ltd., V/s. M/s. M.K.J. Corporation reported in AIR 1997 SC 408, the Hon'ble Supreme Court in paragraph 6 has held that it is a fundamental principle of Insurance Law that utmost good faith must be observed by the contracting parties and that good faith forbids either party from concealing what he privately knows, to draw the other into bargain from his ignorance of that fact and his believing the contrary. It is further made clear that just as the insured has a duty to disclose, insurers and their agents are also expected to disclose all material facts within their knowledge,
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since obligation of good faith applies to them equally with the assured. In paragraph 7 of the said decision, it is held that the duty of good faith is of a continuing nature and that after the completion of the contract, no material alteration can be made in its terms except by mutual consent. The materiality of a fact is judged by the circumstances existing at the time when the contract is concluded.
24. The learned Judge, while dealing with the case, has clubbed issues 1 and 2 and has made a common discussion and this should not have been done. Section 10 of the Indian Contract Act and decision rendered in AIR 1984 SC 1014 have been referred to and discussed. What is stated is that Ex.D2 the original policy was not returned by the proponent and if she had really returned the same objecting to the insertion of clause 4B, then policy would not have come into existence. In view of the fact that she paid the premium amount after the receipt of the policy would go to show that she had accepted the conditions imposed in Ex.D2. Clause 7 of Ex.D1 is referred to by the
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learned Judge in the judgment in paragraph 19 at page
15. Clause 7 is in regard to the surrender of the policy for cash after the premiums have been paid for atleast 3 years. That clause has no application.
25. In the light of the non-examination of the agent, who canvassed for the proposal and the person, who actually explained the contents of the restrictive clause 4B, we are unable to come to the conclusion that it had been explained about the consequence of Clause 4B and that the deceased obtained policy knowing fully well Clause 4B. According to us, withholding a very important witness from the purview of the Court amounts to an adverse inference that could be drawn under Section 114(g) of the Evidence Act.
26. In paragraph 22 of the impugned judgment, there is a discussion about the annual income of Basanthi Kumari D.Jain and the imposition of Clause 4B. It is held that imposition of clause 4B was proper as her income was below Rs.50,000/-. Of course, the Insurance Company had the discretion to impose clause
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4B and insured cannot question the same and the imposition of such a clause is on the basis of the statement obtained vide Ex.D17 from one Sri.U.S.Pai, Chartered Accountant. Though the income was increasing from year to year, definitely it was below Rs.50,000/- and therefore, imposition of clause 4B would be proper.
27. But the crucial question is that before imposing clause 4B, whether the consent had been really obtained? The very circular issued by the Zonal office of the LIC at Hyderabad would conclusively prove that it was incumbent upon the authorities to get the consent of the proponent before imposing clause 4B, that too after proper explanation. We have specifically held that the LIC has failed to do so and the important witness has not been examined and thereby best evidence has been withheld.
28. The Insurance Company has relied upon Ex.D3(a) which is a document on which special
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conditions are attached to Policy No. 620802989. The contents of Ex.3A are reproduced below:
"Notwithstanding anything within mentioned to the contrary, it is hereby declared and agreed that in the event of death of the life assured occurring as a result of intentional self injury, suicide or attempted suicide, insanity, accident other than an accident in a public place or a murder at any time on or after the date on which the risk under the Policy has commenced but before the expiry or three years frm the date of this policy, the Corporation's liability shall be limited to the sum equal to the total amount of premiums (exclusive of extra premiums, if any) paid under this policy without interest.
Provided that in case the Life Assured shall commit suicide before the expiry of one year reckoned from the date of this policy, the provisions of the clause under the heading Suicide printed on the back of the policy shall apply."
29. It appears that the Senior Branch Manager has put his signature on this clause 4B. The date is overwritten. Though it is mentioned as 19.08.1994, it is clear that there is an overriding insofar as it relates to
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the month in which it is signed. Ex.D2 the original policy which bares the signature of the Senior Manager dated 19.08.1994. When the signature of the Senior Manager found on Ex.D2 is compared with the signature of the Senior Manager found on Ex.D3(a), it can be certainly said that these two signatures do not tally with each other.
30. "Whether Ex.D3(a) had been appended to Ex.D2 while issuing the policy?" is the question. If this Ex.D3(a) had been appended to Ex.D2, the original policy, it would have been something different. As already discussed, the Administrative Officer of LIC, Shimoga has admitted that there was no necessity to send a separate appendage inserting Clause 4B to the policy. It is found in the deposition at page 7. From a plain reading of this portion of the evidence, it is clear that this Ex.D3(a) is a similar document like Ex.D2 and Ex.D3(a) had not been appended to Ex.D2 the original policy while sending the same to the insurer. If a document like Ex.D3(a) had been tagged on to Ex.D2, there would have been some force in the argument
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advanced by the Insurance Company that the insurer knew about the contents of the respective clause.
31. Hence, it is very relevant to rely upon a decision reported in ILR 2004 KAR 713 by the Supreme Court in the case of Roop Kumar V/s. Mohan Thedani. In the said decision, the Hon'ble Supreme Court has dealt with Sections 91 and 92 of the Indian Evidence Act. Sections 91 and 92 apply only when the document on the face of it contains or appears to contain all the terms of the contract. Section 91 is concerned solely with the mode of proof of the document while limitation imposed by Section 92 relates only to the parties to the document. It is further held that after the document has been produced to prove its terms under Section 91, provisions of Section 92 would come into operation for the purpose of excluding evidence of any oral agreement or statement for the purpose of contradicting, varying, adding or subtracting from its terms. Therefore, Sections 91 and 92 in effect supplement each other.
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32. In the present case, we have come to the conclusion that a document in the nature of Ex.D3(a) produced by the LIC before the Trial Court had not been appended to the original policy issued to the proponent vide Ex.D2. Under such circumstances we are unable to countenance the argument that plaintiff cannot lead oral evidence varying the terms of Ex.D2 the original policy. This aspect has not been properly considered by the Trial Court. No proper marshalling of facts is done in this regard. The learned Judge has proceeded on the assumption that Ex.D3(a) was a part of Ex.D2 and therefore, the covenants found in the prohibition clause 4B are applicable moreso, on the ground that the insured died within three years by committing suicide. Exercising to impose clause 4B is different from taking consent of the insurer for such a clause is different. Even otherwise the deceased was a house wife having studied up to 9th Standard only. She was not as active partner of M/s. Lakshmi Jewellers. Under such circumstances, she cannot be considered as literate
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enough to understand such a lengthy restrictive clause- 4B.
33. On re-appreciation of the entire oral and documentary evidence and on proper application of the law, to the facts of the case, we are of the opinion that the defendant has failed to explain the consequences of clause 4B to the insured - proponent and had not obtained the consent from the deceased proponent. Further, the Insurance Company has failed to prove that Ex.D3(a), a document similar to Ex.D2 consisting of clause 4B had been appended to Ex.D2 and in order to make it an integral part of Ex.D2. Hence, we answer points 1 and 2 in the negative.
Point No.3
34. In view of this negative finding on points 1 and 2, interference is called for by this Court.
35. Admittedly, the amount of Rs.22,226/- being the amount pertaining to two premiums paid by the deceased has been returned to the plaintiff, sum assured was Rs.3,00,000/-. Out of this a sum of
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Rs.22,226/-has to be deducted. Then the remaining amount would be Rs.2,77,774/-. A sum of Rs.40,000/- is claimed as accrued bonus. What is the basis for arriving at that amount is not forthcoming. Of course almost two years had elapsed from the date of coverage of risk to the date of the death of the proponent. A nominal amount could be awarded regarding bonus. Hence, we award Rs.10,000/-, which is the approximate bonus, which might have accrued. Hence, a sum of Rs.10,000/- towards bonus is added then the total amount would be Rs.2,87,774/-. Then, what is the rate of interest to be awarded on the said amount is the question.
36. In M.K.J. Corporation's case (AIR 1997 SC
408), the question of granting interest has been considered. The insured therein had been deprived of the right to enjoy the money under the policy. Necessarily this loss has to be compensated by way of payment of interest by the Insurance Company in trial case also. Any how, LIC had no option to invest the money except in the securities specified by the
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Government of India. For such investments 11.3% p.a. was the rate. Hence, it is rounded off to 12% p.a. with effect from 01.01.1991 as per M.K.J. Corporation's case. Same analogy can be applied in the present case and we are of the opinion that granting interest at the rate of 12% p.a. on this amount would meet the ends of justice.
37. Hence, interference is called for by this Court and appeal will have to be allowed by setting aside the dismissal of the suit bearing O.S. No.255/1997 and consequently the judgment and decree will have to be modified in accordance with the discussion made above. Hence, we pass the following order:
ORDER
(a) Appeal filed under Section 96 of the Code of Civil Procedure challenging the dismissal of O.S. No.255/1997, which was pending on the file of Principal Civil Judge, (Sr. Division) at Shimoga, is allowed.
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(b) The order of dismissal of suit bearing O.S.No.255/1997 is set-aside.
(c) Consequently, suit bearing O.S. No.255/1997 is allowed in part directing the defendant -
Insurance Company to pay a sum of Rs.2,87,774/- (Rupees Two lakhs eighty seven thousand seven hundred and seventy four) with interest at 12% p.a. thereon from the date of filing of suit till realization along with proportionate costs throughout.
(d) The Registry shall draw a modified decree and send back the records along with a copy of the judgment to the Trial Court.
Sd/-
JUDGE Sd/-
JUDGE SPS