State Consumer Disputes Redressal Commission
The Competent Authority Malad, Mumbai ... vs Smt. Kamla Jain on 21 October, 2011
CHHATTISGARH STATE
CONSUMER DISPUTES REDRESSAL COMMISSION
PANDRI, RAIPUR
(A/11/2367)
Appeal No. 86/2011
Instituted on 17.02.11
1. The Competent Authority (Claims / OMKAR),
H.D.F.C. Standard Life Insurance Co. Ltd.,
5th Floor, Eureka Towers, Mindspace Complex,
Link Road, Malad (West),
MUMBAI - 400 064
2. The Executive Operation,
H.D.F.C. Standard Life Insurance Co. Ltd.,
2nd Floor, Pujari Complex, Block B-1, Pachpedi Naka, Dhamtari Road,
RAIPUR (C.G.)
3. The Office In-charge,
H.D.F.C. Standard Life Insurance Co. Ltd.,
1st Floor, Vanijya Bhawan,
Sai Nagar, Devendra Nagar Road,
RAIPUR (C.G.)
Through: Prashant Dwivedi, In-charge Officer. ... Appellants.
Vs.
Smt. Kamla Jain, W/o Shri Sohan Lal Jain,
Qr. No. 167, R.M.S. Colony, Taigore Nagar,
RAIPUR (C.G.) ... Respondent.
PRESENT: -
HON'BLE JUSTICE SHRI S.C. VYAS, PRESIDENT
HON'BLE SMT. VEENA MISRA, MEMBER
HON'BLE SHRI V.K.PATIL, MEMBER
COUNSEL FOR THE PARTIES: -
Shri Mahesh Tiwari, for appellants.
Shri R.K. Bhawnani, for respondent.
ORDER
Dated: 21 /10/2011 PER: - HON'BLE SMT. VEENA MISRA, MEMBER This is an appeal filed by the OPs insurer against order dated 17.01.2011 passed in Complaint Case No.416/2009 by the District Consumer Disputes Redressal Forum, Raipur (hereinafter called // 2 // "District Forum" for short), whereby the complaint was allowed and the OPs were directed to pay to the mother of the deceased insured, the insured sum as well as accident benefit aggregating to Rs.1,47,462/- and also to pay interest @ 6% p.a. from the date of complaint together with Rs.1,000/- towards cost of litigation.
2. The facts of the case before the District Forum are that the complainant‟s son, Shri Ashish Jain had obtained HDFC Children Double Benefit Plan Policy bearing No.10405812 dated 21.10.2005 for a sum of Rs.73,731/- with equal sum under accident benefit, yearly premium was Rs.5,000/- and the policy was to mature on 21.10.2019. It was averred in the complaint that the complainant had regularly paid premium for 3 complete years and on 15.11.2008 he met with an accident near Nalghar Chowk, Raipur and died. The accident was reported to the police. The complainant gave intimation to the insurer and laid claim. However, the OPs had sent a discharge voucher dated 16.12.2008 without mentioning payable amount. Thereupon the complainant contacted the Office and by way of letter dated 19.12.2008 she demanded full payment of the assured sum together with accident benefit. OPs sent cheque No.336353 for a sum of Rs.18,893/- with covering letter dated 20.03.2009. The complainant refused to accept the check and returned it to OP no.1 as the amount paid was insufficient. The complainant‟s son had paid premium continuously for 3 years, // 3 // though the premium for 4th year could not be paid before the due date and later on the insured died in accident after merely a few days. So the complainant filed complaint before the District Forum for getting the insured sum and accident benefit together with interest and cost etc. She also filed documents and affidavit in support of the complaint.
3. In joint written version, the OPs took the plea that the complainant‟s son had made a proposal to OPs and thereupon the policy was sent to him with terms and conditions with clear mention of a grace period of 15 days. It was to be returned in case the insured did not accept the terms and conditions mentioned therein. As the policy was not returned, the terms and conditions had become binding on the insured as well as the nominee. In the policy it was mentioned that yearly premium was to be paid on 21st October every year till 2019. Further period of 15 days grace period was also provided. In the instant case after calculating the grace period, the premium was to be paid by 5th November, but as the insured had not paid the premium by 05.11.2008, so the policy was in lapsed condition, when the policyholder died on 15.11.2008. The amount payable to the nominee was calculated according to the terms of the policy and cheque of a sum of Rs.18,893/- was sent to the complainant, which was returned by her. The said cheque was again sent to the complainant on 13.05.2009, which was again returned by her. It was averred that the // 4 // complainant only wishes to get sympathy of the Forum though actually she is not entitled to any relief claimed under the complaint.
4. On the basis of material placed before it, the District Forum came to the conclusion that the complainant was entitled to get full amount together with accident benefit and interest on the said amount @ 6% p.a. from the date of complaint and Rs.1,000/- towards cost.
5. The OPs aggrieved by the impugned order had filed appeal on the ground that the District Forum has failed to consider the terms and conditions mentioned in the policy, though the said conditions were accepted by the insured as the policy was not returned within a period of 15 days. The District Forum has also failed to appreciate the fact that the premium was due on 21.10.2008, but the insured failed to pay the premium either on the due date or within the grace period thereafter, which was available to him till 05.11.2008. As the premium was not paid, condition no.4, 5 and 6 of the policy were attracted and accordingly the amount, which was payable to the nominee / complainant was sent to her by means of cheque, but the complainant refused to accept it. The OPs did not commit any deficiency in service and the directions given to the OPs by means of impugned order, are not tenable in view of terms and conditions of the policy. Hence indulgence of this Commission has been sought. Learned counsel for // 5 // the appellant arguing the matter before us reiterated the aforesaid grounds.
6. Counsel for the respondent/complainant submitted that in all life insurance policies, the grace period is one month but not less than 30 days after the due date, incase of premium payable yearly, half- yearly and quarterly. Grace period of 15 days is provided only in case of monthly payment of premium. To support his arguments, he has filed copy of several policies issued by LIC in favour of various persons. He reiterated that as per guidelines of IRDA as well as the Insurance Act a grace period of 30 days is to be provided, in case the payment of premium is yearly. He has also filed photocopy of page 183 and 184, of The Insurance Regulatory and Development Authority (Protection of Policyholders‟ Interests) Regulations, 2002. He stated that the insured had paid premium for 3 years and hence, the policy had become paid-up policy, so the complainant is entitled to receive entire insured sum together with accident benefit and interest and cost as has been rightly directed by the District Forum. He submitted that there is no need to interfere with the order passed by the District Forum. He also drew out attention to few photocopy of pages of the book Modern Law of Insurance in India and tried to convince that as per provision of Section 113 of the Insurance Act, as the premium was continuously paid for 3 years, the total aggregate sum mentioned in // 6 // the policy was to be paid to the complainant. He also submitted that in Life Insurance Policy, there is Automatic Extension Clause and the surrender value must be adjusted towards the premium and the policy cannot be forfeited.
7. We carefully considered arguments of both parties and perused the record of the District Forum.
8. It is apparent from the policy document issued in favour of the insured that grace period of only 15 days has been specifically mentioned. As per covering letter dated 21.10.2005 sent with policy No.10405812 to the insured, he was given an option to withdraw. Under the aforesaid heading it was mentioned - "In case you are not agreeable to any of the provisions stated in the Policy and the details in the proposal form, you have the option of returning the policy to us stating the reasons thereof, within 15 days from the date of receipt of the Policy. On receipt of your letter along with the Original Policy documents, we shall arrange to refund the premium paid by you, subject to deduction of the proportionate risk premium for the period on cover and the expenses incurred by us on medical examination and stamp duty charges. A Policy once withdrawn shall not be revived, reinstated or restored at any point of time and a new proposal will have to be made for a new Policy."
// 7 //
9. The portion reproduced hereinabove clearly shows that a clear option to return the policy within 15 days was provided. It is noted that the date of commencement of policy has been mentioned in the policy schedule as 21.10.2005 i.e. the date of proposal itself. Against the heading „Premiums‟ : „Rs.5,000/- payable annually from the date of commencement. Final premium due on 21.10.2019‟ has been mentioned. Standard policy provisions, containing the terms and conditions were indisputably enclosed with the policy. Clause 4, 5 and 6 of the said provisions have been referred by the present appellant during the course of arguments. We would like to reproduce the said clauses:
"(4) Payment and cessation of premiums
(i) The first premium must be paid along with the submission of your completed application. Subsequent premiums are due in full on the date(s) (called here the "Due Dates") and at the frequency set out in your Policy schedule.
We will not accept part payment of the premium. Any statutory levy or charges including any indirect tax may be charged to you either now or in future by the Company and such amount so charged shall become due and payable in addition to the premium and such charge shall be subject to the same terms and conditions as applicable to payment of premium (ii) If any premium remains unpaid 15 Days after the due date, we may lapse your Policy with effect from the Due Date of the first unpaid premium, (iii) If premiums cease your Policy may acquire a surrender value, to be determined by us at our sole discretion, (iv) If, however, you pay premiums for a continuous period of 3 years, your Policy will acquire a guaranteed minimum surrender value, which will be calculated in accordance with Provision 5 of these Provisions.
(v) The surrender value must be used to secure benefits for the Beneficiary only.
(5) Guaranteed minimum surrender value // 8 // If you pay premiums for a continuous period of 3 years, the guaranteed minimum surrender value of your Policy, including the value of any attaching bonuses, will be:- Zero in respect of premiums paid in the first year and 50% of premiums in respect of the basic benefit paid subsequent to the first year, excluding all premiums for additional benefits and extra premiums.
(6) Lapsed Policies, Paid up policies and Reinstatement
(i) Lapsed and paid up policies in the event that any premium remains unpaid 15 days after the Due Date and your Policy has either, at our discretion acquired a surrender value, or has acquired a guaranteed surrender value, your Policy will be altered to a paid-up Policy, subject to any terms and conditions which we may specify from time to time and additional benefit(s) will be cancelled. These terms will involve a reduction in benefits and you will be informed accordingly."
10. It is noted from the text mentioned in clause 4(i) that subsequent premiums in full were to be paid on date(s) (called here the "Due Dates") at the frequency set out in your Policy schedule. However, we do not find any clear mention of „due dates‟ in the Policy Schedule or in the Standard Policy Provisions. However on joint reading of the Policy Schedule and the Standard Policy Provision, it may be inferred that as the date of commencement has been mentioned in the policy as 21.10.2005 and final premium due has been mentioned to be on 21.10.2019, so only by implication it may be said that due date for payment of premium was 21st. October and annual premium was not paid by the life insured on the „due date‟ or within 15 days thereafter, before he died on 15.11.2008.
// 9 //
11. The case of the present appellant was that they had paid the amount as payable under the provisions of clause 5, & 6 of the standard policy provisions because premium for continuous period of 3 years was paid and the policy had become a paid up policy as per provisions contained in the aforesaid documents. Counsel for the appellant submitted, during course of arguments, that no other amount, in excess of the amount offered by the appellant, is payable to the complainant and the OPs are still ready and willing to pay the said amount which they had offered earlier.
12. Counsel for the respondent has filed photocopy of several life insurance policies issued by the LIC of India wherein period of grace for yearly, half-yearly and quarterly policies has been mentioned as one month but not less than 30 days. He has also filed a photocopy of the regulation issued in 2002 by The Insurance Regulatory and Development Authority (Protection of Policyholders‟ Interests) (hereinafter referred to as IRDA for short) but failed to point any clear mention in the said regulations to the effect that the period of grace would be one month but not less than 30 days in case of premiums payable, yearly, half-yearly or quarterly and if death occurs within this period and before the payment of the premium then due, even then the policy will not lapse. Learned counsel submitted that in all life insurance policies issued by LIC such condition has been mentioned // 10 // and as other insurance companies are also governed by the Insurance Act and the regulations issued by IRDA same grace period must be deemed to have been provided. In absence of any specific provision to that effect in the Insurance Act, the Rules made thereunder or the Regulations issued by IRDA, it is not possible for us to conclude that in all life insurance policies period of grace should be one month and not less than 30 days in case of yearly payable premiums. 13 It is a known fact that insurance is an agreement between the parties and the parties are bound by the terms of agreement. Though we do not find in the terms of policy that grace period was one month or 30 days yet one thing is certain that though the date of commencement is mentioned in the policy as 21.10.2005 i.e. the date of proposal itself but we have noted that the policy was issued on 26.10.2005. We have also come across while filling the Proposal Form the life to be assured was made to understand and make a declaration that 'contract of insurance would be governed by the provisions of Insurance Act 1938 and that the same will not commence until written acceptance of this application by HDFC Standard Life Insurance Company Ltd. Is received.' be effective only after its acceptance by the insurer, so the date of commencement, so far as we think, ought to have been some date after 26.10.2005 as the proposal was accepted on the said date and the written acceptance of the // 11 // proposal must have been received after 2-3 days thereafter. It is further noted that there was no request from the life to be assured, for issuing policy from a back date. Normally in the matters where death occurs prior to the date of issuance of the policy though coverage of risk is provided from a back date, the insurer usually comes forward with the plea that as the person had died prior to issuance of policy, the policy cannot be said to be effective at the time of death of the insured. Such double standards cannot be allowed. So far as this case is concerned the insured died ten days after completion of grace period in case due date is considered to 21st but 1-2 days or even no delay after the completion of grace period if the due date is considered to be 26th. or thereafter, the date of receipt of acceptance by the life assured. We are not aware on what date the complainant received the acceptance.
14. However, looking to the fact that the insured had paid premium for continuous period of 3 years but he died prior to paying due premium marginally after the grace period we believe that looking to the fact that the insured was a very young man of 30 years of age who had died an accidental death and there was only marginal delay in payment when the life assured died, the insurer ought to have considered the case sympathetically and exercised the discretion in favour of the complainant. We are of the view that in such a case like this, the insurer, ignoring hyper-technicalities and on an equitable // 12 // consideration ought to have made ex-gratia payment of at least half of the amount payable on death of the policyholder.
15. In light of foregoing discussion the order of the District Forum directing full amount to be paid, cannot be sustained and it is hereby set aside. However, the appellant Insurance Company is directed to consider the case of complainant sympathetically in the light of discussion made in paragraph no.14, above, without being hyper-technical to pay some reasonable amount on ex-gratia basis to LR of the deceased insured. With these directions, the appeal is disposed of.
(Justice S.C. Vyas) (Smt. Veena Misra) (V.K. Patil)
President Member Member
/10/2011 /10/2011 /10/2011