State Consumer Disputes Redressal Commission
1. Department Of Posts And Anothyer vs 1. Chittipothula Parvathi @ Padmavathi ... on 17 April, 2013
BEFORE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD F.A.No.161 OF 2012 AGAINST C.C.NO.91 OF 2011 DISTRICT FORUM GUNTUR Between: 1. Department of Posts rep. by Asst.Director O/o the Postmaster-General Vijayawada Region, Vijayawada-10 2. Department of Posts Rep. by Head Post Master Mangalagiri HO, Guntur Dist. Appellant/opposite party A N D 1. Chittipothula Parvathi @ Padmavathi W/o Ch.Sivaiah, Ananthavaram Village Tadikonda Mdl., Guntur Dt. 2. Chittipothula Sivaiah S/o Venkateswara Rao, Ananthavarama Village Tadikonda Mdl., Guntur Dist. Respondents/complainants Counsel for the Appellant M/s V.Vinod Kumar Counsel for the Respondent M/s Served QUORUM: SRI R.LAKSHMINARASIMHA RAO, HONBLE MEMBER
AND SRI THOTA ASHOK KUMAR, HONBLE MEMBER WEDNESDAY THE SEVENTEENTH DAY OF APRIL TWO THOUSAND THIRTEEN Oral Order (As per Sri R.Lakshminarasimha Rao, Honble Member) *** 1, The opposite party is the appellant. The appeal is challenge to the order of the District Forum which directed the appellant to pay an amount of `1,00,000/-with interest @ 9% p.a. and `5,000/- towards compensation and `1,000/- towards costs.
2. The first respondents brother Rambabu during his life time obtained postal life insurance policy bearing policy number on 30.04.2004 for a sum of `1,00,000/-. He paid premium of `821/- and appointed the respondents as his nominees for the purpose of the sum assured under the insurance policy. The insured paid installments regularly till January, 2006 and thereafter failed to pay some of the installments and he paid all the installments on 30.07.2007 along with penalty and interest. After the death of the insured, the respondent submitted claim along with relevant documents on 1.05.2008 and the appellant repudiated the claim on 22.04.2009. The respondents got issued notice on 1.04.2011 and filed complaint against the appellant.
3. The appellant resisted the claim on the premise 2006 to March 2007 and paid premiums intermittently upto March, 2008 that the insured paid quarterly premiums regularly from April, 2004 till December,2005 and he failed to pay premium from January,2006 and as such the insurance policy was moved to lapsed condition under Rule 39 of Post Office Insurance Fund Rules. It is contended that the insured did not get revived the insurance policy in accordance with Rule 41 of Post Office Insurance Fund Rules and he paid the premium for 9 months from January, 2006 to September, 2006 and for 6 months from October 2006. The appellant refunded the amount paid by the insured subsequent to lapsing of the insurance policy and as such there was no deficiency in service on the part of the appellant.
4. The respondent no. filed his affidavit and the documents, ExA1 to A21 and on behalf of the appellant, the Superintendent of Post Offices filed his affidavit and no documents have been marked.
5. The District Forum allowed the complaint on the premise that the appellant proceeded to receive premium without informing the insured about requirement of submission of good health declaration form and it observed that the appellant failed to prove its contention that the amount of `7,389/- was refunded to the respondents.
6. The opposite party has filed appeal contending that the District Forum allowed the complaint without considering the terms of contract and Post Office Insurance Fund Rules and that unless the insurance policy is revived on submission of good health declaration by the insured, the sum assured cannot be paid to the respondents.
7. The point for consideration is whether the order of the District Forum suffers from misappreciation of facts or law?
8. The first respondents brother during his life time obtained postal life insurance policy bearing number RAPVJEA1922656 from the appellant on 30.04.2004 by paying premium of `821/-. Copy of postal life insurance policy evidences payment of first premium and assurance for sum of `2,00,000/- to the respondents in case of the insured meeting death during the period the policy is in force. from April, 2004 till December,2005 and he failed to pay premium from January,2006 and as such the insurance policy was lapsed by operation of Rule 39 of Post Office Insurance Fund Rules.
7. It is not disputed that the insured paid quarterly premiums regularly for 9 months from January,2006 to September,2006 on 30.11.2006 and for six months from October, 2006 to March,2007 and he paid the subsequent premia intermittently. The insured died due to ill health on 13.03.2008. The appellant through letter dated 22.04.2009 informed the respondents that their claim is repudiated as the insurance policy which was lapsed during the lifetime of the insured was not revived by submission of good health certificate and the amount paid subsequent to lapsing of the insurance policy was expressed to be paid on the respondents submitting sanction memo.
8. The learned counsel for the appellant has contended that the insured paid the premium for the months of January,2006 to June,2006 on 30.11.2006 and the premium for January,2006 as such was paid in the month of November,2006 whereby the insurance policy was automatically lapsed in the month of July,2006. He has submitted that for revival of three years old insurance policy, the insured has to pay entire outstanding premium and submit good health certificate from Assistant Surgeon or Assistant Civil Surgeon.
9. In the Pass Book the terms have been prescribed for lapsing of the insurance policy. As per clause 8 of the terms of the pass book, a two year old insurance policy or the policy within thirty six months from the date of its issue can be cancelled after a period of six months if the premium is not paid every month. For a three year old insurance policy, if the premium is not paid for a period of 12months, the policy would be deemed to have been lapsed. Periodicity of premium and the circumstances under which the insurance policy is treated as lapsed are mentioned in Clauses 5 and 6 of the insurance policy which read as follows:
5. PAYMENTS OF PREMIA The insurant is personally responsible for the payment of premium. The premium shall be paid in advance on the first day of the period to which it pertains as per the periodicity mentioned in the schedule viz., Monthly, Quarterly, Half-yearly or Annually or within the days of grace thereafter as indicated below. The promise of the Government to pay the amount assured is conditional on the insurant paying the premium regularly and punctually.
Periodicity Days of grace (Reckoned from the 1st day of the period) Monthly One calander Month Quarterly 45 days Half-yearly 60 days Yearly 75 days
6. LAPSATION OF POLICY The policy shall be treated as lapsed in case the policyholder fails to pay the premium(s) that has/have become due against his/her policy within theperiod of grace in accordance with rules 39 & 40 of the Rules, applicable.
10. The terms of the pass book and those of the insurance policy are to be read with Rules 39 and 40 of the Post Office Insurance Fund Rules which make it clear that Rules 39 and 40 are the ultimate authority to provide for the circumstances under which an insurance policy can be treated as lapsed. What Clause 6 of the insurance policy states is the lapsing of the insurance policy subject to the provisions of Rules 39 and 40 of the Post Office Insurance Fund Rules.
11. Rule 39(1) of the Post Office Insurance Fund Rules enumerates the circumstances in which the insurance policy becomes void while Rule 40(1) renders the insurance policy inactive in the situation provided therefor. Rules 39(1) and 40(1) read as under:
Rule 39(1) If, in the case of a policy where death takes place before the completion of thirty six months from the date of acceptance of the policy and where any premium/premia have become due, be not paid either on first day of the month for which the premium is due or within the period of grace allowed as per Rule 28, the policy shall become void and all claims to any benefit in virtue thereof shall cease and all money that have been paid in consequence thereof shall be forfeited except in cases mentioned hereafter;
(1)(i) Provided that for the purpose of this rule, an insured person is not to be considered as in arrears of premium for any months so long as he has not been able to draw his pay, pension or subsistence allowance during suspension, or if the insured person is on leave in India, any leave allowance though due, for the month next before it due to circumstances beyond his control. See also Note 4 to Rule 28 and Note below Rule 36.
(ii) Provided further that the provision of (i) above shall not be applicable to the insurants who pay their premium/premia in cash.
Rule 40(1) Settlement of claims in respect of policies which have remained in force beyond thirty six months from the date of acceptance of policy.
(1) If in the case of a policy which has remained in force for not less than thirty six months from the date of acceptance of the policy, and where any premium/premia havebeen due after such period, be not paid either on first day of the month for which the premium is due or within the period of grace allowed as per rule 28, the policy shall ceaseto be active at the end of twelve months from the date of the first unpaid premium had become due in respect of such policy;
(i) Provided that, for the purpose of this rule an insured person is not to be considered as in arrears of premium for any month so long as he has not been able to draw his pay, pension, or subsistence allowance during suspension, or , if the insured person is on leave in India, any leave allowance though due, for the month next before it due to circumstances beyond his control. See also Note 4 of rule 28 and note below rule 36.
(ii) Provided further that the provision (i) above shall not be applicable to the insurants who pay their premium in cash.
12. Rule 41(1) of POLIF Rules provide for revival of the insurance policy which is not reinstated in terms of Rule 39 (3) or 40 (4) . Rules 39 (3) or 40 (4) POLIF Rules read as under:
39(3) In the event of a policy-holder of a void policy desiring re-instatement of his/her policy within a period not later than six months from the date of first unpaid premium had become due in respect of such policy, he may deposit all the arrears of premium/premia till the date of payment along with interest thereon at the rates as prescribed by the Secretary (Posts)/ Director General of Posts in the Post Office specified for the purpose of payment of premia in respect of such policy and inform the Principal Chief Postmaster General/ Chief Postmaster General/ Postmaster General to this effect along with a certificate of continued good health in the prescribed performa to be signed by the insurant him/her self and a certificate from his/her employer (s) certifying that the said insurant had not taken any leave on medical grounds during the period from the date the first unpaid premium had become due in respect of such policy up to the date of payment of arrears, besides a copy of the receipt (ACG-67) obtained from the said post office. The re-instatement of the policy shall be automatic without any further act on the part of the insurant or the Department however, subject to continued insurability of the life at the time of payment of arrears;
i) Provided that if any payment purporting to be premium payments are made during the period of six months mentioned above and if they do not cover all the arrears together with interest thereon required to prevent the policy from becoming void such payment shall be held in suspense and shall not be considered as payment by way of premium to cover the risk of the life assured. No claim whatsoever shall lie on the Department in the event of death of the life assured during such period when premium/premia are held in suspense and the policy is not re-instated. Such premia as are held in suspense shall be refunded to the policy holder or his/her nominee, or his/her legal heir as the case may be, as and when applied for along with interest as prescribed by the Secretary (Posts) Director General of Posts.
13. In terms of Rule 39(iv) read with Rule 39(v) of the POLIF Rules, the insurance policy is not void nor lapsed and the appellant is liable to pay the amount to the respondents in terms of 39(v) of the POLIF Rules which reads as under:
39(v) In the event of death of the life assured taking place during the period of remission allowed as per sub rule 39 (2) (i) (ii)
(iii) and (iv) above and before payment of arrears of premium/premia that had become due along with interest thereon, the policy shall still be considered valid and the sum assured paid to the nominee or legal heir of the insurant as the case may be after the deduction of unpaid premium/premia from the claim amount along with interest thereon at such rate as may be prescribed by Secretary (Posts)/Director General of Posts. .
14. The learned counsel for the appellant has relied upon the decision of this Commission in Post Master, Madhavaram and others vs V.Jyothi in F.A.No. 453 of2008 decided on 18.10.2010 wherein the insured committed default in payment of premia and the amount paid in post office other than the stipulated post office and the amount paid after the death of the insured was held to get benefit from the postal authorities. It was held that:
When the assured had committed default in payment of premia nor sought for its revival and unilaterally depositing the premia in some other post office and that too without taking permission would not endure to his benefit. The very payment of one of the premia after the death of the assured would itself indicate that the complainant intends to get the benefit. From the payments made by the assured it is beyond doubt that the policy has been lapsed.
There is no revival of the policy.
Therefore the amount that was settled by the postal authorities at Rs.5,373/- would suffice in the circumstances. The complainant is not entitled to any amount under the policy
15. The decision has no application to the facts of the case on hand as the facts of both cases are different. In that case the insurance policy was lapsed and the premium was not paid in the stipulated post office whereas the instant case bears different set of facts delineating the insurance policy being active and in force in terms of Post Office Insurance Fund Rules. In terms of Rule 39(v) of POIF Rules, the appellant is entitled to deduct the unpaid premium and interest thereon if any and pay the balance sum assured under the insurance policy to the respondents. The relief in regard to compensation granted by the District Forum is set aside and the amount awarded as sum assured is modified to the aforesaid extent.
16. In the result, the appeal is allowed modifying the order of the District Forum. The appellant is directed to pay the sum assured after deducting unpaid premiums with interest thereon and the appellant shall pay interest @9% p.a. on the amount payable to the respondents with costs of `1,000/-. There shall be no order as to costs.
MEMBER MEMBER Dt.17.04.2013 కె.ఎం.కె*